Lords Sitting of 10 July 1978

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Norwich.

DIVIDEND CONTROL
Lord BOYD-CARPENTER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they intend to continue control of dividends when the present restrictions lapse on 31st July; and what public purpose has been served by their control.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, the Government are now considering what restrictions on ordinary dividends, if any, may be needed after 31st July when the current statutory controls lapse, and a Statement will be made at the appropriate time. Successive Governments of both Parties have taken the view that, when pay is being restrained, there should also be restraint on dividends.
Lord BOYD-CARPENTER: My Lords, does the noble Baroness fully appreciate that most companies take dividend decisions some months before the dividends are actually paid? Can she, in those circumstances, explain why the Government have now got to within three weeks of the lapsing of the present powers without telling companies and the country what they intend to do?
Baroness BIRK: My Lords, I accept that some companies may be put into difficulties with their planning in the absence of guidance on what would happen on 31st July, and the Government are well aware of this. But, as the noble Lord is aware, this is tied up with other negotiations which are going on at the present time.
Lord BOYD-CARPENTER: My Lords, can the noble Baroness explain, none the less, why the Government have let this get to within three weeks, regardless, apparently, of the consequences to industry? Can she at least, give an assurance that when the announcement is made it will not be made by means of a Written Answer in the Commons on a Friday afternoon?
Baroness BIRK: My Lords, I cannot give any answers about what is going to happen in another place on a Friday afternoon or any other afternoon. So far as the delay in making a Statement is concerned, a number of factors have to be carefully considered as part of the Government's general approach to counter inflation when the present pay round comes to an end. This is not something that one can look at in isolation.
Lord BYERS: My Lords, will the noble Baroness put to her colleagues when they consider this matter, the adverse effect which the control of dividends can have on pension funds, which is becoming quite an important factor?
Baroness BIRK: Yes, my Lords, we are aware of this, but I think that noble Lords must accept that, if one is asking for pay restraint on the part of the workers, then, at the same time, one must ask for dividend restraint.
Lord BYERS: My Lords, I appreciate that; but may I ask the noble Baroness whether or not she agrees that there comes a point in time when that is not an equality? What is going to happen with the present inflation is that pensions will be much more difficult to pay if dividends are restricted.
Baroness BIRK: My Lords, we are aware of the difficulties and the problems. This is why the matter is being looked at extremely carefully to get the balance that the noble Lord has expressed.
Lord PARGITER: My Lords, can the noble Baroness say whether or not it is the fact that the major pension schemes look to capital appreciation rather than to dividends?
Baroness BIRK: Yes, my Lords, I think so.
Lord ORR-EWING: My Lords, will the noble Baroness bear in mind that there is really no correlation between the rise in earnings and the permitted rise in dividends? In the last four years, earnings have risen more than 100 per cent. and dividends have been limited to 10 per cent. on 10 per cent. on 10 per cent. Does this not further create the anomaly that the best and most prosperous firms are not able to attract extra capital and therefore expand further and export better, whereas the moderate firms are treated in exactly the same way? The longer this dividend limitation goes on, the more arthritic our capitalist society will become and the less prosperous will be our nation.
Baroness BIRK: My Lords, I must, I am afraid, repeat that, while I take note (as do the Government) of the point that the noble Lord has made, some companies have already given a public indication of what they intend to do if controls on dividends disappear. Whatever the commercial justification may he (and there is some commercial justification here) large increases in dividends could seriously affect the climate of restraint on pay; and it is impossible for the Government not to be bound to take account of this.
Lord BOYD-CARPENTER: My Lords, can the noble Baroness explain what is the position of a company which, in view of the fact that no control is known to be being continued after 31st July, has already declared an increased dividend to be paid after that date? What is to happen?
Baroness BIRK: My Lords, I am hoping that very shortly there will be a Government Statement on this matter. The noble Lord will then be as much in the light as I shall be.
Lord GLENKINGLAS: My Lords, while I have sympathy with the difficulties that the Government have got themselves into, does the noble Baroness realise that they have known that July 31st was the operative date? It appears to many of us that they are playing this until the last moment so as to make the announcement after Parliament has risen. We may be wrong; but it looks as though this is the way that the Government are playing it.
Baroness BIRK: My Lords, I think, with respect, that that is wrong. The noble Lord started off his supplementary question by referring to the difficulties the Government have got into, but I may say that the Government have managed, with the co-operation of the unions, to keep pay demands down to quite a remarkable extent. Again—and I have to keep saying the same thing—this is part of the discussions on the next round of pay policy. The Government are conscious of this very unfortunate delay and I do not think there is anything more I can say about it.
Lord HEWLETT: My Lords, will the noble Baroness not take on board that the beneficiaries of the pensions are in many cases the employees whose pay increases are being restricted; so that they are in fact achieving not what they desire but precisely the opposite of what they desire?
Baroness BIRK: My Lords, we are aware that in some cases it has this effect. This is another point that is also being taken into consideration.

NUCLEAR MATERIAL: SAFEGUARDS
2.42 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will raise at the appropriate international level the need to verify, by requiring accountability to the International Atomic Energy Authority, that States do not direct nuclear materials from power plants into weapons.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the International Atomic Energy Agency's existing safeguards system has as its aim the detection of any diversion of fissile material from peaceful nuclear programmes. We contribute substantially to the Agency's budget for this purpose, and we have taken an active part in international discussions about ways of improving the system.
Lord BROCKWAY: Yes, my Lords, but is it not the case that the recent report of the Agency showed that the present system is inadequate to detect elicit production of nuclear bombs by the diversion of material from foreign power plants? Does it not say that of 41 States inspected, 12 had deficiencies in accounting?
Lord GORONWY-ROBERTS: My Lords, the Agency report, to which my noble friend refers, indicates that it is satisfied that the safeguarding of the facilities with which it has so far been concerned—namely, research reactors and light-water power reactors—is adequate and has not resulted in the diversion of nuclear material. The Agency has recently undertaken the safeguarding of some fabrication and reprocessing plants on which the report admits that new techniques may be required, much as improved containment and surveillance measures should be developed further. In a letter to a newspaper the Agency has said that many of the inadequacies shown up in the 1977 report have been dealt with.
Lord BROCKWAY: My Lords, may I ask the Minister whether there is a developing danger? Is it not the case that recently there has been detailed evidence of massive material sent to Israel—I am not implying doubts about the Israeli Government—by methods which were fraudulent and deceptive by the companies concerned? Are not the possibilities now of West German supplies to Brazil, and of American recycling of nuclear waste to South Africa, illustrations of this danger?
Lord GORONWY-ROBERTS: My Lords, at the time when this incident allegedly took place in 1968, the then Member States of EURATOM had not ratified the non-proliferation treaty and no agreement existed whereby the EURATOM States accepted IAEA safeguards. The current safeguards applied by both EURATOM and IAEA to all EURATOM countries would make a repitition of this alleged incident of 1968 impossible to keep quiet. It would be reported to the agencies and subsequently to the Secretary-General of the United Nations.

ERITREAN DISPUTE AND THE UNITED NATIONS
2.46 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will propose to the Security Council that the United Nations should seek an end to the war between Ethiopia and Eritrea, in view of the United Nations resolution on the constitutional relationship of the two territories.
Lord GORONWY-ROBERTS: My Lords, the Government favour a negotiated settlement to the Eritrean dispute. Any consideration of the dispute should take into account past United Nations involvement. The Government would favour recourse to the United Nations if sufficient international support were forthcoming. The Government do not, however, believe that a proposal to refer the question of Eritrea to the Security Council would receive the necessary international backing at this stage.
Lord BROCKWAY: My Lords, may I ask whether the United Nations did not declare that there should be a federation between Ethiopia and Eritrea? Is it not a fact that ever since the time of Hailé Selassié, internal autonomy has been destroyed in Eritrea? In view of the fact that three Eritrean groups are now prepared for talks, which is even backed by the Soviet Union and Cuba, would it not be a suitable opportunity for the United Nations Security Council to take some action?
Lord GORONWY-ROBERTS: My Lords, my noble friend is substantially correct about the background to this. It is a fact that in 1950 the General Assembly adopted a resolution calling for autonomy for Eritrea. For a time this was implemented by the Ethiopian Government. However, since 1962, as he has reminded us, this has been taken away and there has been a situation of tension ending in actual conflict. We are cautious about the possibility of

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maintaining that the United Nations has any continuing legal standing in the Eritrean question arising from the General Assembly resolution of 1950, although in our view any solution of the Eritrean problem would have to take into account that fact of the United Nations involvement in 1950. Certainly the fact that there may not be a legal basis continuing from that resolution for involvement would not preclude raising the matter at the Security Council if—and I repeat "if"—there were sufficient international support, and particularly support from Africa itself.
Baroness GAITSKELL: My Lords, as I have said before, is it not illusory—an illusion—to speak as if the United Nations was the seat of world government? Is it not highly dangerous to go on speaking as if the United Nations is the seat of world government? It simply diminishes the role of the United Nations, rather than strengthening it.
Lord GORONWY-ROBERTS: My Lords, it may be illusory to refer to the United Nations as a world government at the present time. It is, I suggest, constructive and hopeful to say that it ought to develop in that direction.
Lord SEGAL: My Lords, do Her Majesty's Government accept the right of the Eritreans either to independence or to some degree of autonomy, since the Eritrean resistance movement has now been engaged in fighting for its rights for something like 20 years?
Lord GORONWY-ROBERTS: My Lords, my noble friend is quite right. The Eritrean liberation movements have been agitating and indeed fighting for something like 20 years for consideration of their national rights, as they see them. There is a certain difficulty here in that it is an internal problem of a sovereign State and a member of the United Nations—that is to say, Ethiopia. Questions of autonomy and devolution are, for all States, internal questions in which external Powers should be very careful not to intervene unless there is an overwhelming necessity to do so.

FOOTPATHS AND BRIDLEWAYS
2.51 p.m.
Lord DAVIES of LEEK: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government, in view of the growing tendency to obliterate footpaths and bridleways, what steps are being taken by the Public Rights of Way Advisory Committee to maintain or re-open these traditional rights of way, and what Government grants have been approved to help finance waymarking and repair of these old rights of way.
Baroness STEDMAN: My Lords, responsibility for the maintenance and waymarking of public footpaths and bridleways lies with the local highway authority in whose area the right of way runs. These authorities also have a duty to prevent, so far as possible, their stopping up and obstruction. These functions may be delegated to district councils. The Public Rights of Way Advisory Committee to which my noble friend refers has no executive responsibilities in these respects. The Committee advises the Countryside Commission on the experimental and research work it might undertake and on such other subjects as the Commission may refer to it. However, the Countryside Commission has a policy of grant-aiding approved recreational footpaths, including their waymarking.
Lord DAVIES of LEEK: My Lords, while thanking my noble friend for that Answer, may I ask whether she is aware that in the Tenth Report of the Countryside Commission page 23 refers to the lack of funds of local authorities for carrying out waymarking and keeping of footpaths? In other words, there has been a draconic cut-back. Also, although as regards pathways one wants to reconcile the needs of agriculture with the needs of the rambler, does my noble friend not believe that more publicity should be given to the Country Code, and also that higher fines should be imposed on those who dump rubbish and litter in our countryside, small as it is now becoming?
Baroness STEDMAN: My Lords, I accept that money is not as plentiful as it might be in very many fields in local government, including conservation of our countryside, but there is little doubt that local authorities are aware of their responsibilities towards maintaining and signposting footpaths in the countryside in general. The Department of the Environment is not content with the progress of all of them, but it would not be right in our present economic situation, which poses very difficult questions and decisions for local authorities as to how they shall allocate their resources, to over-emphasise this particular aspect of their work. What I should like to do at this time is to pay tribute to the very valuable help that many local authorities have had from voluntary bodies, Which have taken over the waymarking and maintenance of public paths. We all regret the dumping of rubbish on our footpaths, in our ditches and what-have-you; and the maintenance is a matter for the highway authorities. It is also a matter for more education and more publicity. But all those things cost money, which at the moment is not in over-plentiful supply.
Lord SANDYS: My Lords, while recognising the responsibilities of local authorities in the matter of waymarking, will the noble Baroness draw the attention of the Countryside Commission to the fact that money and time are very well spent on making recommendations for the amalgamation of footpaths as well as for providing waymarking?
Baroness STEDMAN: My Lords, I am sure that local authorities and the Countryside Commission are aware of that.
Lord MOLSON: My Lords, may I ask the Government whether they are aware that the Countryside Commission produced a policy statement called Bridlenays for Recreation, and that it is in the process of producing another booklet on the subject of footpaths for recreation? Is it not the case that some £40,000 was paid out by the Countryside Commission last year in order to help with the preservation of these footpaths?
Baroness STEDMAN: Yes, my Lords; the Countryside Commission has only
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limited amounts of money, but it has given grants of money and has done a very great deal in order to safeguard our footpaths.
Lord DAVIES of LEEK: My Lords, will my noble friend believe me when I say that I do not wish to denigrate the Countryside Commission, which has spent £30 per kilometre on keeping long-distance paths open? Nevertheless, may I say to her that this matter is something to be taken note of and something which is worthy of a higher amount of expenditure so as to cover the recreation of people from industrial areas as well as of those from country areas?
Baroness STEDMAN: My Lords, I have already accepted that there is a need for more money to be spent, but at the moment the money is not there. The Countryside Commission considers schemes which involve initial costs totalling £1,000 or more, and it does give grants towards them. Voluntary organisations have done a lot of work in this matter and local authorities, where they have the will and where they are willing to allocate resources, have also done a lot of work.
Lord HAWKE: My Lords, is not one of the great problems, particularly in clay country during the winter, that the footpaths are almost obliterated by galloping ponies so that they become virtually impassable because the pony-riders turn footpaths into bridleways?
Baroness STEDMAN: My Lords, that is another question, which raises problems about bridleways and other types of user apart from ramblers.

GOVERNMENT STATEMENTS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, my noble friend Lord Goronwy-Roberts will repeat a Statement on the European Council meeting at Bremen after 3.30 this afternoon. He will then repeat a Statement on the Shcharansky and Ginsburg trials.
KINGS COLLEGE LONDON BILL
Read 3a, and passed, and returned to the Commons with the Amendments.
GREATER LONDON COUNCIL (GENERAL POWERS) BILL
Read 3a, and passed, and returned to the Commons with the Amendments.

BUSINESS OF THE HOUSE
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, on behalf of my noble friend the Lord Privy Seal, I beg to move the Motion standing in his name on the Order Paper.
Moved, That Standing Order No. 43 (No two stages of a Bill to be taken on one day) be suspended for the purpose of taking the Representation of the People Bill through its remaining stages this day. —(Baroness Llewelyn-Davies of Hastoe.)
On Question, Motion agreed to.

EMPLOYMENT PROTECTION (CONSOLIDATION) BILL [H.L.]
2.58 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to move that this Bill be now read a second time. This is an up-dated version of the Bill which passed through your Lordships' House last Session and was then overtaken by the Amendments made to the legislation being consolidated, so that it could not progress further. These Amendments have now been embodied in the present Bill. It is pure consolidation and makes no changes in the existing law. If given a Second Reading now, it will be referred to the Joint Committee on Consolidation Bills in the normal way. I beg to move.
Moved, That the Bill be now read 2a. —(The Lord Chancellor.)
On Question, Bill read 2a, and referred to the Joint Committee on Consolidation Bills.

LOCAL GOVERNMENT BILL
(formerly Local Government Act 1974 (Amendment) Bill)
Read 3a, with the Amendments, and passed, and returned to the Commons.

RATING (DISABLED PERSONS) BILL
3 p.m.
Lord HUGHES: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a. —(Lord Hughes.)
On Question, Bill read 3a, with the Amendments.
Schedule 1 [Amount of rebate under section 1]:
Lord HUGHES Lord HUGHES moved Amendments Nos. 1 and 2:
Page 11, line 15, after ("purposes") insert ("the rating authority may, if they think fit, reduce")
Page 11, line 16, leave out ("may be proportionately reduced") and insert ("by the proportionate amount or any lesser amount").
The noble Lord said: My Lords, Amendments Nos. 1 and 2 are technical Amendments arising from the last minute change which I made to one of my Amendments at Report stage. At Report stage, we amended paragraph 7(2) to give the applicant for a rebate on a garage or parking space the right to choose to have the rebate calculated on the actual rateable value of the garage, instead of the £25 tariff which would otherwise apply. Paragraph 7(3) then provided that a rebate calculated in this way may be proportionately reduced if the garage in question is used for purposes other than housing a disabled person's car.
On further consideration, it seems better that the wording of this sub-paragraph should correspond exactly to the similar provision in paragraph 10, which also gives a local authority discretion to reduce the rebate in certain circumstances. Amendments Nos. 1 and 2, which I seek permission to move en bloc, bring the wording into line and ensure that a local authority has complete discretion not only as to whether to reduce the rebate on a garage used for other purposes, but also as to the amount of any such reduction. My Lords, I beg to move.
Lord SANDYS: My Lords, while recognising the proposal in these Amendments, I should like to ask the noble Lord, Lord Hughes, whether their effect

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will be to cast a greater degree of responsibility on a local authority to view this matter with not quite so much benefit to the disabled person. This is a problem which we discussed at considerable length at the Report stage. In view of the fact that there have been a number of cases in Scotland where a disabled person's garage was occupied by equipment other than the disabled person's car, I am wondering whether a local authority would be inclined to take a view which was out of line with the general purport of this Bill. If we permit total discretion to a local authority in this regard, I hope that there will be safeguards and I am wondering what they will be. Your Lordships do not have the benefit this afternoon of the views of the noble Baroness, Lady Masham of Ilton, who has been so concerned with this clause, and I wonder whether the noble Lord, Lord Hughes, can tell us whether there is a safeguard.
Lord HUGHES: My Lords, I think it is perfectly clear that the effect of these Amendments is to give greater discretion to a local authority than it otherwise might have had. As the Bill originally stood, if there was use of the premises other than just for housing a disabled person's car, there was a mandatory requirement that the local authority would make a proportionate reduction of the amount of rebate. At the last minute, the noble Lord, Lord Sandys, suggested to me that the word "may" should be substituted for the word "shall", and the effect was that it could have been interpreted as meaning that a local authority had two things that it could do: it could either give total relief or make a proportionate reduction.
The effect of these Amendments is that a local authority does not have to make a choice between those two extremes, but it may make a lesser reduction of rebate than a proportionate one. It opens up the way to where a local authority may, for example, decide to make only a nominal alteration. So that the general effect of this wider discretion which local authorities will have must be for the benefit of the disabled person.
On Question, Amendments agreed to.
3.5 p.m.
Lord HUGHES Lord HUGHES moved Amendment No. 3:
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Page 11, line 36, leave out ("or 5") and insert (", 5 or 7(2)").
The noble Lord said: My Lords, this is another technical Amendment, consequential upon the ones made at Report stage. At Report stage, we amended what is now paragraph 7 of Schedule 1 to allow the applicant for a rebate to choose to have the rebate based on the rateable value of his garage, rather than on the £25 tariff. If he makes that choice, it will be necessary, in some cases, for the valuation officer to assess the rateable value of the garage, in accordance with the procedure laid down in paragraph 11 of the Schedule. This Amendment accordingly adds the necessary cross-reference in paragraph 11.
At Report stage, I pointed out how many of the Amendments which improve the Bill have been made possible by the co-operation of my noble friend Lady Stedman, and the noble Lord, Lord Sandys, joined me in thanking her and her Department for the helpful way in which they had regarded this Bill. Having reached the final Amendment to the Bill, I think it would be appropriate if I pointed out that the need for this Amendment was spotted by Mr. Vandyk, who has kept in close touch with the progress of the Bill since it was introduced. He has suggested several of the changes and improvements which we have made during its passage. It would be only right, and in accordance with the way in which your Lordships deal with matters of this kind, if I took this opportunity of publicly thanking him and congratulating him on his efforts in the matter. As noble Lords know, it was the case which he originally brought which drew attention to the unsatisfactory state of the existing law. He has been active, along with many other disabled people and their associations, in pressing for this new legislation and in assisting us in the preparation of the Amendment. I believe that this new Bill will put this rate relief on a much more satisfactory basis, and I hope that all who have been concerned with its introduction will be satisfied with the outcome. My Lords, I beg to move.
Lord SANDYS: My Lords, I am most grateful to the noble Lord, Lord Hughes, for introducing this further Amendment, because it improves the drafting. He has referred to what we said earlier on Report,

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so that there is no need for me to echo what was said at that time. I should like to thank the noble Lord, Lord Hughes, for his most cordial help and co-operation, and I should especially like to thank all those who have assisted in the better drafting of the Bill. The noble Baroness, Lady Stedman, has been particularly receptive, so far as possible, in regard to all the different outside interests. But, of course, no discussion at this stage is complete without further reference to Mr. Neville Vandyk, whose interest has been for a very wide number of disabled people. The drafting of this Bill has been exceptionally difficult, but what has been achieved is quite significant.
Viscount BARRINGTON: My Lords, before the Question is put, I do not know whether I am entitled to speak, not having spoken in any of the earlier debates, although I have followed them with great interest. But from a personal point of view—I cannot do it officially from the Liberal Benches—I should like to join in the congratulations to Mr. Vandyk, who sent me an account of the judgments in the House of Lords. I believe that he has done an immense amount to get this Bill improved. Whether it is improved as much as some disabled people would like is open to doubt, but I should like to join in the congratulations to him, and also to the noble Lord, Lord Hughes, on the co-operative way in which he has dealt with the Bill.
On Question, Amendment agreed to.
3.9 p.m.
Lord HUGHES: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.— (Lord Hughes.)
3.10 p.m.
Lord CAMPBELL of CROY: My Lords, I should just like to take a few seconds of your Lordships' time, because you will remember that for about two years I was putting questions on the state of the law following the appeal in the Vandyk case, which came to your Lordships sitting judicially, when the decision of the Appeal Court was reversed. However, they also pointed out how unsatisfactory was the state of the law.
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I seek now to explain that I should have taken part in the proceedings on the Bill if I had not been very fully occupied with other matters, especially the Scotland Bill. However, it is a matter of great gratification to me that so much agreement upon the Bill has been reached. I should like to congratulate all who have worked hard upon it, in particular the noble Lord, Lord Hughes, who has piloted it through this House. For my part, I passed the continuing representations and correspondence which came to me to my noble friend Lord Sandys who has been handling the matter from these Benches. I should also like to thank the noble Baroness, Lady Stedman, who over a period of more than two years now has been in correspondence with me about the fact that a Bill was going to be presented.
Baroness STEDMAN: My Lords, it is a long time since we started discussion of the Vandyk case and the other one. From the Government Benches, I am very happy to welcome the Bill and to say how much we appreciate the way in which my noble friend has handled it and the help we have had from all sides in getting it on to the Statute Book.
On Question, Bill passed and returned to the Commons.

INNER URBAN AREAS BILL
3.12 p.m.
Read 3a, with the Amendments.
Clause 4 [Declaration of and changes in industrial improvement areas]:
Lord DAVIES of LEEK Lord DAVIES of LEEK moved Amendments Nos. 1 to 3:
Page 4, line 20, leave out ("industrial").
Page 4, line 21, leave out ("industrial").
Clause 5, page 4, line 26, leave out ("industrial").
The noble Lord said: My Lords, I beg to move Amendments Nos. 1, 2 and 3, and, with permission, to discuss also Amendments Nos. 7 to 13. These Amendments have exactly the same intention as those moved at Report stage by my noble friend Lord Plant. I am advised that the Amendments represent a slightly better method of providing for commercial improvement areas. For example, they

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provide for mixed commercial and industrial areas. Noble Lords will recall that at the earlier stage I spoke in favour of the Amendments moved by my noble friend Lord Plant. As I then saw no move on the part of the Government to take up the issue, I put down these further Amendments to ensure that the matter does not go by default.
Briefly, there are four reasons for having commercial as well as industrial improvement areas. First, not all commercial employment is directly related to the needs of the immediate area and thus bound to decline with the reduction in population. There is less scope to attract office employment to inner areas. This was the aim of my noble friend Lord Plant and I when we initiated the change at Report stage.
Secondly, even if, as is often asserted, office employment is not the most suitable employment for inner area residents who have become unemployed because of the decline in manufacturing, surely some new employment is better than none. Thirdly, commerce should be encouraged in smaller centres surrounding the main centre of each conurbation. Finally, the belief that all commercial property development in inner areas will be adequately covered by the private sector is mistaken. There is a need to improve confidence in some of the smaller, rundown commercial centres, and that will be done only by some measure such as this.
I hope, therefore, that the noble Baroness will now be able to say that she can accept these Amendments which were discussed on the last occasion. Since we discussed the proposal at some length on that occasion, when there was general agreement that these Amendments would be useful, I hope that this brief speech of mine will be enough to convince the noble Baroness that the Amendments are worthy of recognition by the Government. I beg to move.
Baroness BIRK: My Lords, the House will be grateful to my noble friend for raising again the subject of commercial improvement areas. When we last discussed the subject I agreed to take away the issues and discuss them with my ministerial colleagues. Consideration of
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them is still continuing. Therefore I am unable today to give our final views to the House. The proposal was widely supported here when it was last raised, but noble Lords will recall that I was not completely convinced that the proposed change was necessary.
In the first place, I do not think that there is such a need for the public sector to take action to revitalise commercial areas as there is for such action to be taken in the older industrial areas. The ordinary property market seems to be better able to deal with commercial property. Secondly, the main environmental eyesores in inner city areas are industrial areas rather than office centres, so the main priority ought to be the improvement of those industrial areas. My worry is certainly not one of principle but one of priorities.
Third, as with the other powers in this Bill, we need to keep in mind the effect that granting these powers in the non-assisted areas will have on the effectiveness of the various regional incentive schemes. It could be that the declaration of commercial improvement areas in places outside the assisted areas would provide a counter-attraction to offices and service industries which might otherwise have moved to the assisted areas. It is extremely difficult to draw an exact line between incentives that will significantly undermine regional incentives and those which are acceptable.
Since the Report stage, the Government have had little time to take a view of the likely effect. In view of this, and since the Commons have not yet had an opportunity to discuss the Amendments relating to commercial improvement areas which were put down at Report stage by my noble friends Lord Davies of Leek and Lord Plant, I think that it would be advisable if the Amendments were to be included in the Bill when it is returned to the other place so that the Commons may have an opportunity to discuss them. It would also give an opportunity to my colleagues to make up their collective minds about them. Therefore, despite certain misgivings, I am prepared at this stage to allow the Amendments to be included in the Bill, although without making any necessary commitment to them on behalf of the Government.
Lord HAWKE: My Lords, when discussions take place I hope that the noble Baroness will not forget the very real problem which exists when urban areas are being redeveloped in providing very small workshops and factories for trades which could employ up to perhaps half a dozen craftsmen. Only too often when inner areas are redeveloped, rates and rents go up so high that these people have to be banished into completely different areas where nobody can get hold of them. That applies also to many types of small shops. Music shops, for instance, simply cannot pay the rates and taxes which are prevalent in redeveloped urban areas. Those problems ought to be considered.
Lord DERWENT: My Lords, further to what my noble friend has just said, many years ago now I raised the question of redevelopment. We have fallen down so often on the provision of foodshops. Sometimes a big store is set up, and there is no choice. People like butchers cannot afford the rents asked for, unless those rents are controlled by local authorities in some way.
Baroness YOUNG: My Lords, may I welcome what the noble Baroness has said. When the noble Lord, Lord Plant, moved his series of Amendments during the Report stage, I felt that this would be a very sensible inclusion. As I understood the position, the reason that the Government had doubts about it was because there was not any increase in the money available and in effect the resources would be spread more thinly.
I support the inclusion of these Amendments because it seems to me that they would provide a measure of alternative development within inner cities and a more flexible approach which would fall very much in line with what my noble friends Lord Hawke and Lord Derwent have suggested. I think this would be helpful for the redevelopment and revitalisation of inner cities. I am not quite sure that I understand the procedure when the Bill reaches another place. I hope very much, despite what the noble Baroness has said, that if the Amendments are included the Government will support them in another place and not seek to support anybody who might—although I do not anticipate this at all—seek to take them out, which I think would leave
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us in your Lordships' House in a difficult position. They certainly have my support and I believe that of my colleagues.
On Question, Amendments agreed to.
Baroness BIRK Baroness BIRK moved Amendment No. 4:
Page 4, line 34, at end insert—
("( ) the clearance or levelling of land;").
The noble Baroness said: My Lords, the Government are bringing forward this Amendment to deal with a point raised by the noble Lord, Lord Evans. He asked whether assistance could be given to help with the clearance and tidying of old railway land such as the sidings often found in industrial areas. On close examination we found that this subsection would not have covered such works. Therefore, this Amendment is designed to ensure that not only old railway land but also other vacant sites can be cleared. The new items to be inserted will provide for works which fall short of the full landscaping provided for by subsection (5)(b). I hope the noble Lord, Lord Evans, is now happy that we have dealt adequately with all the points he made at earlier stages.
Lord EVANS of CLAUGHTON: My Lords, may I say very briefly that I am very grateful to the noble Baroness, Lady Birk, for the consideration that she and her Department have given to this matter, and for the discussions that they have very kindly had with me about it. I am completely satisfied that the Amendment she proposes is a much better Amendment than the one I sought to insert previously to make sure that railway sidings were included. Some of the worst unsightliness in our inner urban areas comes from disused or semi-used or derelict railway sidings. I think my concern that they were not included has been justified. I am very grateful indeed to the Government and would like to thank them for inserting this additional paragraph. I hope it will be supported here and in another place.
Lord SANDFORD: My Lords, may I add my thanks to the noble Baroness. Although perhaps it was not the original intention of the Amendment, it also goes a long way to meet the point I was making in moving Amendments to Clause 6 to cover the preparation and

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improvement of sites for proposed new and converted buildings. It does not do it quite as expressly as that, but the preparation and levelling of sites goes a long way towards it. Clause 5 also makes provision for loans as well as grants. I am very grateful to the noble Baroness.
On Question, Amendment agreed to.
Baroness BIRK Baroness BIRK moved Amendments Nos. 5 and 6:
Page 4, line 37, after ("cleaning") insert ("painting, repair").
Page 4, line 37, leave out line 41.
The noble Baroness said: My Lords, I beg to move Amendment No. 5 and I think it would be for the convenience of the House if I also moved Amendment No. 6. On further consideration we accept the principle behind Lord Sand-ford's Amendment which was forcefully put at Report stage both by him and by other noble Lords. That is that in cleaning up a building to improve the environment it may well be necessary to repair and paint it also. It was again a very difficult line of division between different operations. The Amendments I am moving merely seek to improve the drafting by placing the cleaning, repair and painting together, and ensuring that they all apply to both buildings and structures. This has the same effect as the noble Lord's original Amendment.
I should, however, sound one note of caution. We are still very concerned that authorities should not give help to firms for works that are routine maintenance and part of every firm's normal responsibilities. All the work for which aid can be given must be for the benefit of the area, not just for the benefit of an individual firm. We will certainly emphasise this point in the guidance we give to local authorities. Subject to that caveat, we are happy to accept the spirit of the Amendment which was passed at Report stage and these Amendments seek only to clarify some points of drafting. I beg to move.
Lord SANDFORD: My Lords, I am grateful to the noble Baroness for moving these Amendments, which certainly do what we wanted to see achieved, and do it very elegently. This also makes it
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possible, where appropriate, for the buildings and structures to be repaired and painted on the inside as well as on the outside. I am most grateful to the noble Baroness.
On Question, Amendments agreed to.
Clause 6 [Grants for converting or improving buildings]:
Lord DAVIES of LEEK Lord DAVIES of LEEK moved Amendments Nos. 7 and 8:
Page 5, line 7, leave out ("industrial").
Clause 18, page 10, line 28, leave out ("industrial").
On Question, Amendments agreed to.
Schedule [Industrial improvement areas]:
Lord DAVIES of LEEK Lord DAVIES of LEEK moved Amendment No. 9:
Page 11, line 5, leave out from ("which") to ("could") in line 7 and insert—
("(a) is predominantly an industrial area, a commercial area or an industrial and commercial area; or
(b) if developed in accordance with the development plan, would be predominantly such an area.").
On Question, Amendment agreed to.
Lord DAVIES of LEEK Lord DAVIES of LEEK moved Amendments Nos. 10–13:
Page 11, line 10, leave out ("industrial").
Page 11, line 28, leave out ("industrial").
Page 11, line 31, leave out ("industrial").
Page 12, line 4, leave out ("industrial").
On Question, Amendments agreed to.
Baroness BIRK: My Lords, I beg to move that the Bill do now pass. We have had several useful debates on this Bill and I think we have made a number of improvements in the provisions since they were brought to us from another place. The Bill is only a small part of our inner city policy and it has been frequently described as a modest measure. Nevertheless, we believe it to be a useful one, and I hope that the selected authorities will make good use of the new powers to revive industry and commerce in their areas. I should like to end by thanking all noble Lords who have contributed to the various stages of the Bill and helped to bring it to a speedy conclusion.
Moved, That the Bill do now pass.—(Baroness Birk.)
Baroness YOUNG: My Lords, I, too, should like to say that we have achieved some very useful Amendments. I should like to support my noble friend Lord Sandford and to say how grateful we are to the Government for including these Amendments, which we feel will make a great difference to the appearance of inner industrial areas. We hope very much that the Government will keep in the Bill in another place what we regard as an important Amendment in relation to the voluntary organisations. Although they did not fully support this at Report stage, they did not seek to vote against the Amendments, and we hope, therefore, that they will agree to them. I should like to thank my noble friends who have helped on this Bill and to say that I regard it as a small but useful measure.
Lord EVANS of CLAUGHTON: My Lords, may I say very briefly from these Benches that we very much support the Bill as it now stands, improved, we believe, during its passage through this House and indeed through another place. There are certain disappointments, but life is full of those. We would have liked to see guarantees included, as well as one or two other matters; but, on the whole, on the basis of accepting half a loaf or perhaps even three-quarters of a loaf as better than no bread, which again we on these Benches have become used to in the last few months, I think this Bill should be warmly welcomed. All I hope is that the amity which has been shown here on all sides will be repeated at local authority level, and that the Bill will really be able to do something, through the co-operation of the various agencies at local government and voluntary level, actually to carry into effect the desires that the Bill expresses.
On Question, Bill passed, and returned to the Commons.

CONSUMER SAFETY BILL
3.30 p.m.
Read 3a, with the Amendment.
Lord AIREDALE Lord AIREDALE moved the Amendment:
Page 10, line 36, leave out ("if any").
The noble Lord said: My Lords, I have to apologise for a misprint. The actual words in line 36 are "if and", not "if any" and it is those words which I seek to leave out. It is a purely drafting Amendment. I beg to move.
Lord MOTTISTONE: My Lords, I am happy to accept this Amendment. The noble Lord, Lord Airedale, made a very convincing point in column 109 at Report stage on 5th July on the precedent for this, and close examination of the precedent in the Consumer Credit Bill of 1974 in which the Government accepted an identical Amendment convinced me that this one deserved similar treatment.
On Question, Amendment agreed to.
Lord MOTTISTONE: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass—(Lord Mottistone.)
The LORD CHANCELLOR: The Question is that this Bill do now pass.
Lord TREFGARNE: My Lords, I leapt to my feet as swiftly as I could because there is a point that I should like to raise before this Bill passes and I should like to ask the noble Lord, Lord Wallace of Coslany, whether he can help me on this. Your Lordships will recall that at an earlier stage of the Bill an Amendment was included in the Long Title, and perhaps I should read the Long Title which consists of only two lines:
"An Act to make further provision with respect to the safety of consumers and others".
The words "and others" were added at an earlier stage and have given rise to some concern in certain quarters that the powers which are now apparently available to health and safety inspectors and others arising out of the Long Title might be wider than were originally intended. Can the noble Lord give me an assurance that the powers which seem to be included in this Bill by virtue of the Long Title are not perhaps quite so onerous as some have feared? I hope the noble Lord will be able to put my mind at rest on that point.
Lord WALLACE of COSLANY: My Lords, I should like first to congratulate the noble Lord, Lord Trefgarne, on his

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most remarkable athletic leap to the Dispatch Box which surely should be entered in the Guinness Book of Records. I should like to congratulate the noble Lord, Lord Mottistone, on his able stewardship of the Bill during its passage through your Lordships' House. This Bill has important implications for manufacturers and importers as well as providing the means for the Government to take much more positive action in relation to hazardous goods than has existed before. The Bill is notable for the support it has enjoyed from Members of all Parties: the Amendments which have been introduced in your Lordships' House reflect the careful consideration which the Bill has received and the Bill leaves this House substantially the better for it.
I should also like to thank the noble Lord, Lord Lyell, who is not able to be present today but who has certainly played his part in the Bill although unfortunately he could not be present at all stages, for reasons of which we were well aware. I also thank the noble Lord, Lord Trefgarne. The noble Lord, Lord Airedale, has made his contribution. He has given us one or two headaches but he has proved that he is most persistent and now rejoices in something of a victory.
There is one small matter that I should like to clear up. It relates to the Amendment to the Long Title which added the words "and others". The Amendment was consequential on the acceptance of an Amendment moved by the noble Lord, Lord Mottistone, in Committee, which enables the Secretary of State, when contemplating safety regulations for goods containing radioactive substances, to take into account not only the degree of hazard which they may present to the users but also the possible consequences of radiation to other persons, primarily by the addition of the overall population dose. Doubts have been expressed in some quarters about the effect of widening the scope of the Bill so that safety regulations might he made under it which would bite not merely on consumers but, for example, on employees as employees rather than as consumers. Obviously, there may sometimes be an overlap where safety regulations cover goods which are on open sale to consumers but may also be used in the work situation. The consultation requirement
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in Clause 1(4) takes specific account of this eventuality whereby, in the case of proposed safety regulations relating to goods suitable for use at work, the Health and Safety Commission must first be consulted.
I can give an assurance, however, that there is absolutely no intention to alter the administrative powers of Departments as a result of this legislation so that, for example, the Department of Prices and Consumer Protection might make safety regulations for employees as employees. There is already adequate legislation in this respect in the Health and Safety at Work Etc. Act 1974 and the responsibility for ensuring the safety of employees will remain, as at present, with the Health and Safety Commission. Every endeavour will be made to ensure that, where there is any overlap such as I have mentioned, regulations made under the Health and Safety at Work Act and under this Bill when enacted will be harmonised. Otherwise the position would lead to confusion and would be illogical. I hope this assurance will remove the doubts to which I have referred.
I should like to say one further word on this very important Bill. The number of people injured and killed each year by accidents in the home is about the same as the number injured and killed on the roads. Some 7,000 people die and more than a million receive hospital treatment or treatment from their doctor. More than 30 per cent. of these are children under five years of age. I do not suggest that this Bill will prevent those accidents. No amount of legislation can prevent the human failings, illness and physical frailty which account for the bulk of the accidents. But the Bill will go a long way towards enabling the Government to act in relation to identified hazards in goods which might be called preventable accidents and, in consultation with the standard-making bodies, to assist in formulating standards of safety practices which, where necessary or desirable, can be made mandatory by their incorporation in safety regulations much more flexibly than was possible previously.
This Bill, in conjunction with the promotion of publicity and education on safety matters and the collection of information and promotion of research into the causes of accidents, all of which matters are interrelated and none of

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which is an answer on its own to accidents in the home, should contribute materially to the safety of consumers and, if the Bill results in some improvement in the accident statistics, as I believe it will, then it will be particularly valuable. The Government wholeheartedly support this Bill, as improved during its passage through your Lordships' House and I certainly commend it to your Lordships today.
Lord AIREDALE: My Lords, I should like to support what the noble Lord, Lord Wallace of Coslany, has said about the able stewardship of the noble Lord, Lord Mottistone. This Private Member's Bill is a long and intricate Bill and the noble Lord, Lord Mottistone, has had to grapple not only with the intricacies of the Bill but also with the intricacies of the quite extraordinary Parliamentary procedures which afflict us during the month of July. I am not about to make an attack upon any of the noble Lords who have to navigate and work the "usual channels", but I think that it ought briefly to be stated that here is a Bill which affects absolutely everybody. The safety of goods which one buys in the shops must affect everybody. It is a Bill in which the Government were keenly interested. I think I can say that confidently because the Government themselves moved 20 Amendments to the Bill during the Committee and Report stages and the noble Lord, Lord Mottistone, with apparent Government approval, moved a further 17 Amendments, making a total of 37 Amendments.
The background against which that work was done was as follows. The Committee stage of the Bill came on last Thursday, 29th June, at 7.53 in the evening. It lasted for 28 minutes and at 8.21 p.m. the House was resumed for what was considered to be more important business. Quite unexpectedly, we had to return to the Committee stage of the Bill the next day. Believe it or not, almost exactly the same thing happened on Report. The Report stage began at 7.43 in the evening on 5th July. It lasted for 25 minutes. It was then adjourned, unexpectedly, for what was considered to be other and more important business and the Report stage had to be concluded the next day. I think that one is entitled to say that Parliament cannot give its fullest and most careful attention to legislation affecting everybody under conditions of that kind.
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As regards the Bill itself, let me say at the outset that it contains one blemish. Having referred to this matter at length both in Committee and on Report I shall certainly not go into the arguments again. However, I shall state the blemish baldly, simply because I believe that this is only one in a series of Consumer Protection Bills and having got something wrong this time we must be careful not to make the same mistake again. Baldly stated, the situation is as follows. The Bill purports to give the enforcement officers of local authorities power to enter a trader's warehouse or other parts of his premises to which the public is not normally admitted, purely for the purpose of carrying out a routine inspection without there being any suspicion that anything is wrong in the warehouse. That may be right, but the fact is that the Bill, having stated that purported power, fails to provide a sanction and if the trader were to turn the officer away, refusing him admission, there is no sanction whereby the officer can obtain admittance to the warehouse.
That may tend to bring the officer into disrepute and one does not want that to occur. So, the next time round, we must surely ask ourselves: Do we really want to authorise entry into warehouses for purely routine inspections? That must be an open question. However, if we decide in the affirmative, that routine inspections are to be permitted, then we must provide a sanction so that the officer cannot be turned away by a simple refusal on the part of a trader to admit him to the premises. That is the blemish that we must cure the next time round.
I do not want to end upon a sour note. The Bill must be worthwhile. Nowadays shoppers have to buy sophisticated goods the safety of which they cannot judge for themselves. I am sure that we have done some good. If we have introduced 37 Amendments to the Bill this House must have done it some good, and I wish it well.
Lord MOTTISTONE: My Lords, it remains for me very briefly to say "Thank you" not only to the noble Lords whom Lord Wallace of Coslany thanked—namely, my two colleagues on the Front Bench who have helped me from time to time in different ways—but also to the noble Lord, Lord Wallace, himself for

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sharing part of the burden of Amendments which have come to us really from another place. I should also like to thank the noble and learned Lord who sits on the Woolsack, who did his best to help me the other evening over what the noble Lord, Lord Airedale, called "the blemish". I also wish to thank the noble Lord, Lord Darling of Hillsborough, who I do not think is in the Chamber today but who was of great assistance. Finally, I should like to thank the noble Lord, Lord Airedale, because even if I disagree with him, he has at least made sure that we considered the Bill very thoroughly in this place, perhaps as thoroughly as it was considered in the other place.
On Question, Bill passed, and returned to the Commons.

EUROPEAN COUNCIL MEETING (BREMEN)
3.45 p.m.
Lord GORONWY-ROBERTS: My Lords, with permission I shall now repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"I should like, with permission, to report to the House on the meeting of the European Council in Bremen which I attended with my right honourable friend the Foreign and Commonwealth Secretary on 6th and 7th July.
"We were informed by the President of the Commission that the expected rate of growth in the Community countries this year on present policies would be lower than expected, and we agreed that increased growth is a crucial objective to improve employment prospects. As regards measures to combat youth unemployment, we called for decisions within the framework of the European Social Fund to come into force on 1st January 1979. All Member States will take necessary measures to increase growth according to their own individual circumstances. We agreed that countries with smaller inflation and balance of payments problems will do more to increase domestic demand.
"We agreed that a zone of monetary stability in Europe was a highly desirable
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objective, as part of the concerted international action needed for economic recovery. The German and French Governments put forward for consideration a scheme for a European monetary system. A number of Heads of Government, including myself, wished to see the details fully worked out before entering into any commitment by our respective Governments. We therefore agreed that Finance Ministers should formulate guidelines for a possible scheme taking as a starting point, at their meeting on 24th July, the Franco-German proposals. Officials would subsequently elaborate the necessary provisions by 31st October, and the final scheme would be in front of the meeting of the European Council on 4th and 5th December for decision and commitment. This agreed timetable will permit the fuller preparation and consideration which is essential for a durable scheme. We can thus hope to avoid the errors of 1972 when the previous Government joined a similar scheme on 1st May, but were forced to withdraw only seven weeks later, on 23rd June. However, the outlines of the Franco-German proposal contain some new features and the Government will play their full part in the forthcoming studies.
"The Government have taken the view throughout these discussions that monetary arrangements are not enough by themselves to ensure a zone of monetary stability. Any new system must be one which will last and will take full account of the economic, as well as monetary, interests of each Member of the Community. Therefore, in company with others, I pressed for parallel studies to be made of the action that is necessary to ensure a greater convergence in the economies of the Member countries, especially in such matters as the commitments to growth and transfers of real resources. It was agreed to carry out such studies. It will be necessary to judge how far all these matters have been satisfactorily arranged when we are called upon to take a final decision on such new proposals as the Finance Council may put forward.
"There was a related discussion arising out of the need for a better use of resources in supporting Mediterranean agriculture. This led to an

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extensive discussion of the Common Agricultural Policy as a whole which brought out the dissatisfaction felt by a number of Member Governments with the present scale of agricultural expenditure and with the cost of financing surplus production. This was the most thorough and frank discussion of the defects of the CAP in which I have participated in the Community, and it revealed a great deal of support for our wish to see a more balanced distribution of the use of Community resources as a whole. The Commission was asked to come back with proposals to remedy this at the next European Council.
"As regards Energy, the Council adopted objectives for 1985 calling for the reduction of the Community's dependence on imported energy to 50 per cent. of its total requirements including oil, and emphasised that other industrial countries should set themselves similar objectives.
"The Council expressed its readiness to make progress with the developing countries on such matters as trade, commodity support, stabilisation of export earnings and assistance.
"The Council discussed the situation in the Middle East and Lebanon and in Africa. It regretted the lack of progress towards a settlement in the Middle East, and reaffirmed the principles set out in the Declaration issued by the Council in London on 29th June last year. The Council agreed on the necessity for early and peaceful independence for Namibia and Zimbabwe on the basis of negotiated and internationally-acceptable solutions, and expressed support for the efforts which Britain is making with others to this end.
"This was a constructive meeting in which there was some hard talking because we were getting to grips with important problems. If, as a result, some new solutions can be agreed on the convergence of our economies, on a zone of monetary stability and on the transfer of resources inside the Community, including a better use of resources in the CAP, it could turn out to have been an historic occasion."
My Lords, that concludes the Statement.
3.51 p.m.
Lord SOAMES: My Lords, I wonder whether the noble Lord would be kind enough to answer a few questions on the Statement. First, will he say what the difference is between the concept of the Franco-German proposals, on the one hand, and what the Prime Minister had in mind, on the other hand, when he made abundantly clear recently his desire to see Europe as an area of monetary stability? In asking these questions I refer, of course, not to the detail but to the overall concept of what is proposed.
Secondly, is the noble Lord aware that we should like to see this imaginative proposal studied in a positive manner? Our hope would be that the decision of Her Majesty's Government, if it be taken during the course of the next month or two, would not be influenced by those within their Party who are opposed to all monetary disciplines, be they imposed either from within or by external agreements. Finally, will the noble Lord agree that the postponement by the European Council of the final decision on this matter until December seems to us to be most prudent for good internal political reasons?
Lord BANKS: My Lords, I should like to join in thanking the noble Lord for repeating the Statement made by the Prime Minister in another place. We on these Benches certainly warmly welcome the progress made at the Bremen meeting towards currency stabilisation and towards the establishment of a parallel European currency. We believe this to be very important indeed, and in fact we think that the conference could turn out to be an historic occasion, as the Statement suggests.
However, we regret that the British Government appear to have been somewhat reluctant participants, according at any rate to all that we read in the Press. The timetable for consideration of the plan is given in the Statement, but I do not think that there is any indication as to when the scheme for currency stabilisation might come into effect. I wonder whether the noble Lord can give us any idea as to when that might be? The more permanent and the less experimental the arrangements for currency stabilisation prove to be, the more they will be likely

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to succeed. There will certainly have to be a transfer of resources; that is important, and Her Majesty's Government are right to lay stress on it. Nevertheless, I hope that their attitude between now and December will be positive and constructive in putting forward these different considerations relating to this remarkable and exciting new development.
3.54 p.m.
Lord GORONWY- ROBERTS: My Lords, I can immediately respond to the central point made by the noble Lord, Lord Banks, because it is one that was made by the noble Lord, Lord Soames. Our study will be as constructive and as helpful as we can make it.
The timetable, which both noble Lords mentioned, is as set out in the Statement which I have repeated. It is necessary that a complicated and very important movement forward, in the interests of economic unity, should be properly prepared and properly studied, and I cannot see that there is any suggestion of undue delay, for internal or other purposes, in stipulating, by agreement of the Nine, that by 24th July, when the Finance Ministers meet, there should be something for them to consider, which officials should then prepare by 31st October. That is a short enough period for them to go into the details of a massive scheme of this sort involving great changes in arrangements and, indeed, vast sums of money. Then, as a result of their meeting, in turn, Heads of Government and Foreign Ministers, by the meeting of the Council on 4th and 5th December, will be in a position to consider whether they can come to a decision and offer a commitment.
I would commend to your Lordships' House a further study of this Statement, which I imagine will, on close scrutiny, yield encouraging answers to the question that we have already heard.
Lord BALOGH: My Lords, I thank the noble Lord for repeating the Statement and congratulate the Prime Minister for his courageous stand against taking premature decisions. I should like to ask my noble friend whether he will not agree that this newly re-baptised Snake is a crude attempt by economic means to impose German domination of Europe, which they failed to achieve by military means?
Lord GORONWY-ROBERTS: My Lords, I must strongly dissent at once—
Several noble Lords: Hear, hear!
Lord GORONWY-ROBERTS:—with my noble friend in his animadversions on an important and helpful partner of ours in the Community. I think that on reflection he, himself, may wish to revise his statement. As to what he said about the Prime Minister, we are, indeed, fortunate that we have a Prime Minister who not only knows his way around these complicated subjects, but is willing to stand up for the interests of this country.
Lord GLADWYN: My Lords, will not the Government agree that, whatever the dangers inherent in our going along with some, let us hope tempered, version of the Franco-German plan for currency stabilisation, the prospect of our being relegated virtually to some kind of Second Division in Europe, with the inevitable consequence of protection so long advocated by noble Lords opposite, is considerably more alarming?
Lord GORONWY-ROBERTS: My Lords, I would deplore this use of terminology suggesting that this country is somehow being relegated in some league table or other. The fact is that we are playing our part in Europe by speaking out and making contributions of an informed and expert nature on the most difficult subjects, including this one. I know the noble Lord's record in this matter; he has served this principle with great distinction for many years. But I would ask him to accept that the best way in which a workable and lasting scheme on these lines can be adopted by consensus is to ensure that we get it right from the start. We did not get it right in 1972 and we had to beat a hurried retreat—in six or seven weeks, having put our signature to that scheme.
Lord LEE of NEWTON: My Lords, could my noble friend say a little more on the point that he made on energy? It would appear that the only two nations in the Community with coal are Great Britain and Germany. Germany is not proposing to increase its output of coal; therefore, we are the only nation that is. Along with our oil, it would appear that

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we are to play a far greater part than any other country in fulfilling the point made in the Statement about increasing indigenous supplies of energy. Could my noble friend say whether they are hoping to make up on atomic energy, or something of that kind?
Lord GORONWY-ROBERTS: My Lords, I think that my noble friend is well aware of Government policy to advance as far as possible appropriately in all sectors of the fuel industry, including that of nuclear energy. As to the decision of the Council last week, it was agreed that there should be every effort made to reduce by 50 per cent. our collective dependence on imported energy, including oil. That clearly means to me, as it did to them, that we should expand severally in our various countries, and certainly in this country, which has important indigenous resources, our own national production. We shall need to do so of course in every respect by co-operation and consultation with our partners in the Community.
Lord BLYTON: My Lords, would not the Minister agree that the new monetary policy means that the economic power to control our own economy here is to be further whittled away to the Continent?
Lord GORONWY-ROBERTS: Not necessarily, my Lords. Of course if we get it wrong, that and a number of other dangerous results may ensue, but we are hoping, with our partners, to tackle this question properly from the start, taking time to utilise all the expert advice available in order to get it right, so that it will work and be of lasting benefit to all Members of the Community. That is why it is natural for us to link with the Franco-German proposals the equally important and complementary suggestions about the reform of the CAP, and indeed of the distribution and deployment of resources in the Community as a whole, which is the second point which the Statement emphasises.
Lord SOAMES: My Lords, may I ask the noble Lord, following upon the question of his noble friend, whether he would appreciate that there are nine countries involved? We are not the only country which does not wish to see our economy controlled from outside. This is something which all together wish
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to bring about because it is going to be for the benefit of all. For goodness' sake, we are not going to stand out just because we are the only ones who say that this is not such a good idea because we are frightened of what other people might do. Others equally are going to see that decisions so vital to the health of their economy are not going to be taken above their heads, but a bit of common discipline is surely going to be required.
This leads me to ask the noble Lord—I asked him this in my supplementary, but I do not think that I understood his answer very well—what is the difference between the German-French proposals on the one hand for a zone of monetary stability within Europe, and what the Prime Minister had in mind when he was referring to the desirability of bringing about just this?
Lord GORONWY-ROBERTS: My Lords, the noble Lord did not understand my answer because—and I apologise for this—I did not answer. He asked what was the difference between the approach of the Franco-German proposals and the observations made cogently by my right honourable friend when these came up for discussion. I think it lies in the one word "convergence"; economic convergence, which the noble Lord perhaps understands better than any other Member in this House, and if we add also resources and proper distribution of resources so that the kind of fairness as between all Members of the Community, to which he spoke just now, is in fact achieved. That is the difference. We are not yet satisfied that those two points are fully understood by some of our partners. As to being on our own in asking for consideration of our own national interests, we were not on our own. As the Statement makes clear, my right honourable friend the Prime Minister was by no means the only Head of Government who expressed these necessary caveats and reservations.
Lord ARDWICK: My Lords, is my noble friend aware that many of us on this side of the House have great hopes that the Bremen scheme is going to lead somewhere, and that it is important and potentially valuable? But will he, for the sake of clarity, make it clear to some of my noble friends that this is a scheme of

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monetary co-operation? It is not to be confused with ultimate monetary union which implies a single currency and a kind of federal structure behind it for the implementation of a European monetary policy. This is a scheme of monetary co-operation with an economic side attached to it.
Lord GORONWY-ROBERTS: My Lords, I think that most people will define the scope and nature of these proposals—they are no more than proposals—in their own way. Of course it is more than a scheme of monetary co-operation. It has its implications for economic development, and that, quite properly, is one of the preoccupations of my right honourable friend and the Government in considering these proposals.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I am in some difficulty here. I see one noble Lord from that side and another noble Lord from our side of the House who wish to speak. Perhaps the House would like them very briefly to each ask a question, and then call it a day.
Lord MORRIS: My Lords, may I ask the Minister of State whether Her Majesty's Government consider monetary union to be a cause of economic union or a symptom of such economic union?
Lord GORONWY-ROBERTS: My Lords, to attempt to answer such a question at Question Time would be to introduce a not very rewarding seminar. If the noble Lord would like to discuss this with me, I should be glad to do my best, but not just now.
Lord WIGG: My Lords, will the Minister convey the thanks of most of us, at any rate, to the Prime Minister for the clarity of the Statement which has been repeated in this House today, and for his courage in standing up for the interests of this country? Would the Minister realise that he made a very important point when lie stressed how necessary it is to get our approach absolutely right? Would he therefore urge on the Prime Minister to seek every means in his power to make sure that the issues which, after all, although they affect the other eight countries also affect the British people,
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are made known to our fellow-countrymen? And, not least of all, to make known the terrible price that Britain is paying for the follies of a Conservative Government which dashed headlong into an arrangement and then, seven weeks later, withdrew from it, and that the price of that bill is still being paid in terms of unemployment?
Lord GORONWY-ROBERTS: My Lords, I shall most certainly convey my noble friend's words to the Prime Minister, who, in any case, knowing the source of those sentiments, will himself take care to read them in Hansard tomorrow.

REPRESENTATION OF THE PEOPLE BILL
4.8 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, I beg to move that this Bill be read a second time. This is a short Bill, and is deliberately of limited scope. Its two substantive clauses are both concerned with election expenses. The first proposes an increase in the maximum expenses which may be incurred by a candidate at a Parliamentary election. The second proposes that subsequent increases in these limits and in the comparable limits for local government elections should be effected by secondary, rather than primary, legislation.
My Lords, there has been a strict control over the expenses incurred by candidates at Parliamentary elections since the Corrupt and Illegal Practices Act 1883. I believe that there is general agreement on all sides that such a limitation is essential in the sort of democracy that we enjoy, to prevent the richer parties and candidates from obtaining an undue advantage in the election campaign as a result of their wealth.
The trend in the first half of this century was for a reduction to take place in these limits both in real and in money terms. Thus Acts of 1918, 1928 and 1948 successively reduced the limits on candidates' expenses contained in the Act of 1883. Subsequently, these limits were increased in 1969 and 1974, primarily to restore the value of the limits in real terms.

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Generally, these changes have been preceeded by discussion in a Speaker's Conference on Electoral Law and the legislation has been based on a Conference recommendation. The Government would have wished that the present Bill could have been similarly founded on a Speaker's Conference recommendation. My right honourable friend the Prime Minister proposed some time ago to the leaders of the other main Parties that a new Speaker's Conference should be established to consider a number of electoral topics. Unfortunately, it has not yet proved possible to secure the agreement of the official Opposition to the terms of reference for such a Conference.
In view of the fact that, under the Parliament Act 1911, there must be a General Election in or before October 1979, the Government considered it would be sensible to consult the other main Parties on an increase in the expenses limits for candidates at Parliamentary Elections. The results of that consultation were mixed; some of those consulted considered that no increase was required in the expenses limits, and some that it would be right to increase the limits to take more or less full account of inflation since February 1974, when, as I indicated, they were last checked. Most of those consulted, however, considered that there should be a substantial increase, but with more emphasis on the variable amount per elector than on the basic sum.
It is in the light of those views that the Government brings forward the proposals contained in this Bill. We propose that the present limits should be increased to a basic sum of £1,750 and a variable element of 2p per elector in a county constituency. In a borough constituency, the figures would be £1,750 plus 1½p per elector. The present limits, set in February 1974, are £1,075 plus 1p per elector in a county constituency, or £1,075 plus ¾p per elector in a borough constituency. These figures may be more meaningful if I relate them to a typical constituency of 60,000 electors. The proposals in the Bill would raise the total amount from £1,675 to £2,950 in a county constituency, and from £1,525 to £2,650 in a borough constituency. The percentage increase will vary depending on the size and type of constituency, but the increase in a county constituency of 60,000 electors
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is just over 75 per cent. The Government consider that these increases would be justified and would provide a fair balance between the needs of large and small constituencies and I hope the House will share that view.
I turn to the other part of the Bill covered by Clause 2. This provides that the Secretary of State may by order vary the maximum amounts of candidates' election expenses at Parliamentary Elections, certain local government elections and certain elections in the City of London to take account of any change in the value of money. At present, an Act of Parliament is required to make any change, however small, in the expenses limits for Parliamentary or local government elections. This is because the actual figures are provided in the Representation of the People Act 1949 and any change must at present be effected by primary Legislation.
It is clearly right that Parliament should retain control over these limits since, as I mentioned, they constitute an essential element in our democratic process. At the same time, it seems inappropriate to require the full legislative procedure in those cases where changes of a very limited nature are being made. It is for this reason that we are proposing this procedural change. Clause 2 contains, however, two essential safeguards. The first is that the order-making power should be limited to increases to take account of inflation. The second is that orders would be subject to the Affirmative Resolution of both Houses, and thus Parliament would have the final say.
I hope your Lordships will agree that this is a sensible and welcome proposal. The Government believe that the present proposals are sensible and necessary. As I have explained, they result from consultation with the other Parties, and I hope they will meet with the approval of the House.
Moved, That the Bill be read 2a—(Lord Harris of Greenwich.)
4.15 p.m.
Lord CAMPBELL of CROY: My Lords, we are grateful to the noble Lord, Lord Harris of Greenwich, for explaining the purposes of the Bill. It is of course a matter of special concern to the other

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Chamber, but it is of interest to all who are involved in our Parliamentary system. Such proposals normally follow a Speaker's Conference, and Lord Harris indicated that that has not occurred on this occasion and that the Bill has come forward as a result of consultations with other Parties.
There is general agreement that candidates' expenses should be raised and there is of course one main reason for that; that is, inflation. It is a reflection of the extent of the inflation there has been since the two Elections of 1974 that the limits set in this new Bill in real terms are less than the limits that existed in 1974. So it is not, in effect, an increase in purchasing power; it is a reduction from the limits which were available in the 1974 Elections. Some of us therefore think this increase in monetary limits is not enough and that it should have been put higher. However, I can see that because this had to be done on the basis of consultations—because the Government had to do that—they were cautious about raising the limits.
Also, for the reasons of inflation, there is in Clause 2 the new power for the Home Secretary in future, by an order with the Affirmative Resolution procedure, to obtain the consent of Parliament to raise the limits. We hope that will not be necessary for some time. If inflation were to go into double figures again, it would be necessary before long, but it is our hope it will be a much longer time than four years before it will be necessary to come forward with an order to raise the limits again.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I believe these limits are too low. I know the thinking behind the statutory limits and in my view they have always been too low. There was a time when the so-called richer Party, whichever that was, was able to influence very small electorates by the expenditure of very large sums of money, but I believe that, with universal suffrage, that time has now passed. The danger nowadays is that we set limits so low that after the end of the election either candidates or their agents swear affidavits which are not strictly true. That has happened on a gigantic scale in the United States, and I believe that one of the contributory causes of the decline of standards in American public life is that most candidates for
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office start their careers by committing perjury.
Lord HARMAR-NICHOLLS: My Lords, I rise to reiterate the last point made by my noble and learned friend—
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I hope the House will forgive me if I intervene to say that we had arranged to take a Statement now. One understands of course that some noble Lords wish to speak on the subject at present before the House. However, would noble Lords care to take the Statement now?
Several noble Lords: Yes.

SHCHARANSKY AND GINSBURG TRIALS
4.19 p.m.
Lord GORONWY-ROBERTS: My Lords, with permission, I will now read a Statement being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:
"I will, with permission, Mr. Speaker, make a Statement on the trials of Anatoly Shcharansky and Alexander Ginsburg which have opened in the Soviet Union today.
"The whole House will deplore the fact that the Soviet Government have now put on trial 15 members of the Helsinki Monitoring Group. The Helsinki Final Act states that individuals have the right to know and act upon their rights and duties in the field of human rights. These trials, in as much as the charges relate specifically to activities fully compatible with the Helsinki Final Act, are in direct contravention of the spirit and intention of the Act.
"The British Government have repeatedly warned the Soviet Government of the consequences which their handling of such cases could have for the atmosphere of their relations with the United Kingdom, and for the chances of making progress on vital issues in East/West relations generally. I personally made this clear to the Soviet Foreign Minister when I met him on the first of June.
"A Preparatory Meeting for the CSCE Scientific Forum is now taking place in Bonn. I have instructed our representative to raise at the earliest opportunity Soviet actions in relation to the Helsinki Monitoring Group and to make it crystal clear that we expect all the provisions of the Act to be implemented".
My Lords, that concludes the Statement.
Lord CARRINGTON: My Lords, the House is obliged to the noble Lord for repeating that Statement, and your Lordships on all sides of the House will welcome the firm tone of that Statement. Recent events are indicative of the Soviet Union's disregard of, and indeed contempt for, world opinion. They seem not to take any notice of the views of the whole civilised world about these trials and, incidentally, this action makes nonsense of the Soviet claims that they represent freedom-loving people in Africa.
In view of the Helsinki treaty, and the seemingly empty Russian acceptance of it, would the Government assure the House—and they have gone some way towards doing this—that there will be a linkage between the policies of the Soviet Union as a whole and the individual items, such as the SALT Treaty, on credit on easy terms, which they are either eager to finalise or eager to accept? Secondly, might I ask the noble Lord whether these trials were discussed at the EEC Heads of Government meeting, so that there is a concerted view on the part of the whole EEC towards what is happening in the Soviet Union?
Lord BYERS: My Lords, we join in deploring these latest Russian trials. Those of us who have been in politics since before the Second World War must be gravely concerned at what looks very like a return to Stalinism in these trials and these charges. It is clear that the Russians do not understand the meaning of détente. They cannot understand it if they can proceed in a mockery of justice to make the monitoring of an agreement which they signed at Helsinki a crime against the State. It simply does not make sense. May I ask the noble Lord whether Western broadcasts are still getting through to Russia, and,
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if they are, I should like to express the hope that the media in this country and the West reflect the feeling of grave concern in this country to the Russian people.
Lord GORONWY-ROBERTS: My Lords, the noble Lord, Lord Carrington, asked for an assurance that there is a relationship between various aspects of détente. Without using his words, I think I put it in a way that he would not disagree with. There certainly is a relationship and we point this out from time to time. I particularly take the point he made about detente being indivisible; that it is impossible to expect the good results of détente to be confined to one area of the world without regard for what is happening in other areas, and that applies particularly to Africa. As to the point he raised about the EEC, this question was not specifically discussed. One of these cases was the subject of discussion. The discussion was more general in the Community about this, but I have no doubt that there will be essentially concerted attitudes and action by our partners on these cases. It is necessary, as your Lordships will agree, to await the results of this trial before we definitively decide—possibly with our partners—precisely what further steps and further attitudes we should take.
I very much welcome, as always, the contribution of the noble Lord, Lord Byers. I believe that everything he has said coincides very closely indeed with the attitude of Her Majesty's Government and with our friends and allies both inside and outside Europe.
Lord JANNER: My Lords, may I thank my noble friend first of all for the steps which are being taken and also for the manner in which he has consulted with other members of the European Council, and so on. Does he realise that there is anguish in the hearts of millions of people throughout the world at what is happening today in these trials; that they very much resemble the Stalin trials at which, for example, even two very eminent Russians who came over here in order to obtain funds from this country to help during the war—in which I had the privilege of participating as an officer—were murdered; and that the world as a whole can only shudder at the horrific manner in which the USSR is

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treating this matter? My noble friend said that we have to await the result of these trials. May I respectfully ask him to try to get together as many people of standing in the world before the trials proceed further, so that iniquity may not be carried to the same bitter end that Stalin himself carried it. Knowing that public opinion eventually had the effect of making even the people of the USSR condemn what Stalin had done, perhaps it is not too late. So may I ask him to see what can be done without further delay.
Lord GORONWY-ROBERTS:My Lords, yes, certainly. I was addressing myself to the question of action, the expression of attitude or action by Her Majesty's Government, and addressing myself to a specific point made in these exchanges. We shall want to see how this trial proceeds. We have tried, unsuccessfully, to have an observer there. It is part of the illustration of how this trial is proceeding that we have not been able to get an observer to attend the court. We must await the result of the trial before we can decide whether further representations should be made, and, if so, of what kind. In the meantime, of course, during the trial the attitudes of the Government and people of this country will be made crystal clear to the Soviet authorities. Indeed, exchanges such as this here in your Lordships' House and no doubt in another place will not be lost upon the Soviet authorities.
Lord WIGODER: My Lords, may I ask the noble Lord whether he is aware that neither of the defendants in these cases has had the right to choose an advocate of his own choice; that neither of them will have the right to give evidence, and that neither of them will have the right to call witnesses on his own behalf, and, if that is so, is the noble Lord really in serious doubt about what the result of these farcial trials will be?
Lord GORONWY-ROBERTS: My Lords, I am in no serious doubt about the difficulties placed upon the defence, which the noble Lord has substantially illustrated. I do not know what the result of the trial will be. I can only hope it will be nothing like the savage treatment meted out to Orlov only a few weeks ago. While one
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is very careful not to use emotive words from this Box while this trial is proceeding, it is a function of the British Parliament—and it is performing that function today in the other place as well as here—to make it clear, through the voice of Parliament, that we expect this trial at least to be conducted within the bounds of fairness and equity and that we await its result with apprehension; one would like to say hope. It is for that reason that I venture to say that exchanges in this House and in another place may conceivably he of some help to the unfortunate people now facing these charges in Soviet Russia.
Lord WIGG: My Lords, does the Minister realise that when the noble Lord, Lord Carrington, put his question to him he asked for an assurance that there was a linkage between trials, on the one hand, and a policy, on the other? Is the Minister aware that the word "linkage" in that context has a special technical meaning, carrying with it consequences of very great seriousness? When the Minister replied he carefully avoided using that word, and he gave an assurance on something much less than linkage—rather a relationship, which I understand and approve—whereas linkage in this connection involves a path which leads right to the abyss. I should like to know whether the Minister was giving an assurance in relation to linkage, or whether he used the word "relationship" carefully and advisedly.
Lord GORONWY-ROBERTS: The short answer is, yes, my Lords. I used the word "relationship" advisedly, and I am sure that the noble Lord, Lord Carrington, in using the word "linkage", had in mind much the same meaning as I had in using the word "relationship".

REPRESENTATION OF THE PEOPLE BILL
4.31 p.m.
Second Reading debate resumed.
Lord HARMAR-NICHOLLS: My Lords, I should like to reiterate the point made by my noble and learned friend Lord Hailsham of Saint Marylebone. It was, I believe, a real point, and I consider that as a result of the discussions on

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costs, it ought to be given more weight than it has perhaps been given. There is no doubt that in almost every election the expense returns are not, strictly speaking, accurate. Technically, they are put in a form which permits them to be passed, hut I do not think that by merely taking into account inflation the real future problem has been met. Candidates in an election ought to be able to give their expense returns in the full knowledge that they have been able to do their duty in presenting what they consider to be the correct case, while at the same time not infringing the limits on expenses.
I do not think there is any longer need to be strictly accurate, down to three-quarters of a penny. Certainly there ought to be a ceiling, but there also ought to be a margin within which those who want to be economical in their campaign and assiduous in presenting their case can have a certain leeway which enables them to spend the amount of money needed in order for them to do their duty. There are certain constituencies—some held by Labour, others by Conservative—where there is no need to spend money to any great extent in fighting an election because the result is known even before the election date has been declared. Overwhelming majorities are virtually certain in such constituencies, and in these cases spending could fall well within the boundaries which have been agreed and which have been presented to us today.
However in the marginal seats, where candidates have to fight hard to ensure that their point of view is properly presented, they want to go to the limit allowed, and today the limit is not sufficient. We know that candidates get round this limit by all kinds of technicalities. For example, envelopes are bought well in advance and are then sold to the campaign committee for less than they cost. We know, too, of outside organisations which help the Parties. For example, trade unions help noble Lords opposite, while other organisations help some of my friends, and they find ways of giving electoral assistance without the cost of this having to be recorded on the expense returns. I believe that this is a bad thing; there is no need for it.
There ought to be a margin which would enable the case on all sides to be properly put, while at the same time the
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returns which are submitted can withstand probing. It is in this regard that I want to try to emphasise to the noble Lord the reason why I think that the words of my noble and learned friend should be taken into account. We know that in certain constituencies small groups try to unseat candidates, or at any rate try to ensure that certain candidates are not acceptable at future elections. The groups do this in order to try to get control. As the situation is at present, if these groups insisted upon a detailed investigation into expense returns submitted after an election, the returns might be found to be outside the legal limits set down. It could be that because of an infringement on what was possibly a mere technicality the genuine feelings of the electorate in a Parliamentary constituency were perverted.
There is no longer any need to try to evaluate, in the strict terms which are included even in the new arrangement which has been made after discussions, what it costs to fight an election. We have to agree to what is proposed because due to the time factor it must not be delayed. However, I hope that the Government, and any future Government, will consider very carefully the possibility of allowing a margin on the expenses which would enable candidates to submit returns which would be strictly accurate, which would withstand any probing, and which would give candidates a start in their Parliamentary life without having in the back of their minds the thought that there has been collusion with their agents and other organisations which has helped. Such collusion may not be alleged in a nasty way, but it would not be in strict conformity with the rules laid down. It is with that point in mind that I hope that, while we approve this proposal today, the real fears which my noble and learned friend and I have expressed will, in the very near future, be taken into account in terms of giving a more realistic basis for expense allowances.
4.37 p.m.
Lord WIGG: My Lords, no Member of this House or of another place has more right to speak on winning a Parliamentary seat by a short head than the noble Lord, Lord Harmar-Nicholls. Over the years he won his seat by under 10 votes

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on more than one occasion. For me it was a different story. I won a Conservative seat with no assets at all, other than a typewriter from which a couple of letters were missing. But my path was comparatively easy, and I intervene in the debate merely to say that one of the factors which has led to the increase in the cost of elections is the treating of the electorate as if they were a bar of soap or a packet of detergent. I am not looking across at the other side of the Chamber as I say this, although I notice that occasionally, including today, the exchanges are not always entirely free of what I would regard as one or two overhead shots connected with the coming General Election. However, I am basically a non-political animal and I will not indulge in such practices myself, except to say that I deplore the treating of the electorate on this basis.
The expenditure of vast sums of money by particular sections of industry, furthering the political causes of one political Party before the election starts, so that the amounts involved are not included in the election expenses, is just as important as the situation of the unfortunate candidate who has an inefficient agent and so has to go to the courts to obtain an indulgence because he has spent 4p over the odds. I hope that this problem is tackled in the next Parliament, by the next Labour Government, so that what happens at present becomes not unlawful, but at least difficult to carry out. The electorate consists of individuals, each of whom has his own feelings about how he wishes to vote. He makes a decision on voting based on rationality and on feelings which are associated not only with his own interests, but those of the community in which he lives as well as the country at large.
Elections should be approached with this borne in mind, rather than by trying to indulge in the "hard sell", which is backed up by a fictitious election expenses return which covers only part of the campaign period. Literally millions of pounds were spent before the last election, and I have no doubt that millions will be spent before the next election. Have a look at the hoardings even at the present time. Therefore, while I find no difficulty in supporting this Bill, let us remember that the escalation of costs is in part
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due, of course, to inflation, but are also due to the bringing in of professional advisers with expense accounts, which are the very nature of the advertisers' calling and where the sky is the limit.
4.40 p.m.
Lord HARRIS of GREENWICH: My Lords, I will speak, if I may, fairly briefly to the points which have been made. As my noble friend Lord Wigg has said, he is indeed an entirely non-partisan person, but I should say to him that matters of the sort which he has just raised really are matters for a Speaker's Conference, and obviously go outside the terms of the existing Bill. Indeed, this is the point which I must make in answer to the points made by the noble and learned Lord, Lord Hailsham, and the noble Lord, Lord Harmar-Nicholls. The fact of the matter is that we have decided that it is appropriate to take account of inflation so far as this is concerned, because here we are acting without a Speaker's Conference having taken place. If a Speaker's Conference had taken place, this and other matters might have been gone into; but, as the House is aware from what I said when I moved the Second Reading of this Bill, we have had consultations with representatives of the political Parties and have tried to effect the greatest amount of agreement between all those concerned. That is why the Bill is drafted as it is at the moment.
In answer to the noble and learned Lord, who referred to the point of the United States, I agree with him: there have indeed, if I may say so, been substantial abuses so far as election procedures in the United States are concerned. There has been a great deal of argument and debate about this in the Congress. But, of course, the United States have not in the past had anything approaching the tight supervision of candidates' expenses we have in this country. There has undoubtedly been abuse—and I would not in any way quarrel with the noble and learned Lord—but the American position is very different from our own. I say this not in any way to quarrel with him in terms of the general thrust of his argument; all I would wish to repeat is that I think this is the kind of question which should be gone into by a Speaker's Conference, and that can take place when all the Parties concerned are prepared to move in that direction.
On Question, Bill read 2a: Committee negatived.
Then, Standing Order No. 43 having been suspended, pursuant to Resolution, Bill read 3a, and passed, and sent to the Commons.

FARM CAPITAL GRANT (VARIATION) (No. 2) SCHEME 1978
4.43 p.m.
Lord WALLACE of COSLANY Lord WALLACE of COSLANY rose to move, That the Farm Capital Grant (Variation) (No. 2) Scheme 1978, laid before the House on 6th June, be approved. The noble Lord said: My Lords, noble Lords will no doubt recall that this Statutory Instrument was laid before Parliament on 6th June 1978 and was made to give effect to the undertakings given on 22nd March 1978 that we would give extra financial assistance to farmers and growers whose land, buildings, roads, fences and other works or facilities had been badly affected by the abnormal storms and blizzards of the winter. I shall not keep your Lordships' House very long because I am sure we are all in sympathy with the purpose of this Statutory Instrument. It is, however, rather more complex than the previous 1978 Variation Scheme, which dealt with the restoration of flooded land, and I shall try to cover only the more salient and important points.
Noble Lords will see that the Statutory Instrument came into operation on 7th June 1978; that is, the day after it was laid before Parliament. Its continuance is of course subject to the will of Parliament. As I explained when we debated the earlier Variation Scheme, no disrespect is involved in bringing the Statutory Instrument into effect before there has been an opportunity for debate. The primary legislation—Section 29 of the Agriculture Act 1970—permits us to do this. Noble Lords will, I am sure, understand that we acted as we did so as to be able to make cash available as soon as possible for farmers or growers whose buildings and other works had been seriously affected by the abnormal blizzards and storms this winter. We have particularly in mind the disastrous events of 30th-31st October 1977 and 28th-29th January 1978 in Scotland; 11th-12th November
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1977 in North-West England and Wales; 11th-12th January 1978 on the East Coast and in Kent; and 15th-19th February 1978 in South-West England and Wales.
What the Statutory Instrument will do, if Parliament approves, is to allow us to give 60 per cent. grant (as opposed to the normal rates of 20 per cent. or 30 per cent. available under the Farm Capital Grant Scheme, 25 per cent. or 40 per cent. under the Farm and Horticulture Development Scheme and 25 per cent. under the Horticulture Capital Grant Scheme) for replacing or reconditioning to their former condition buildings destroyed or damaged by the abnormal storms and blizzards. For similar operations on roads, fences, bridges, culverts, river banks, farm flood protection banks and other related items, as set out in the Schedule to the Statutory Instrument, the grant will be 50 per cent. except in less-favoured areas—broadly, the hills—where it will be 70 per cent. Grants for these operations are now at 20 per cent. for the lowlands and 50 per cent. for less-favoured areas under the Farm Capital Grant Scheme, and 25 per cent. and 50 per cent. respectively under the Farm and Horticulture Development Scheme.
Your Lordships will wish to know that special account is taken of Scottish circumstances. In Scotland, there will be special grants for replacing or reconditioning the banks or channels of watercourses affected by the abnormal storms, generally at 75 per cent. but at 85 per cent. in less-favoured areas. These grants reflect the Scottish farmers' position under the Farm Capital Grant Scheme 1973. Incidental operations, such as replacing electricity or water supply services in destroyed or damaged buildings, will also qualify for grant at the higher rate.
Noble Lords will have noted that the scheme before your Lordships' House is a United Kingdom Scheme. It will run in parallel with the Farm Capital Grant (Variation) Scheme 1978, which Parliament approved in April and provided higher grants for the restoration of flooded land to its former level of productivity. As we did for that scheme, we are taking advantage of Article 92.2(b) of the Treaty of Rome, which allows special aids to

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alleviate the effects of natural disasters. In this way, these special aids are not subject to the EEC's Farm Modernisation Directive. This means, my Lords, that they are not affected by the various restrictions contained in the Directive. One of these is a maximum amount of investment per labour unit which can qualify for grant, so that this limit will not apply to any of the work. The limitations on investment aids for pig enterprises and the total bar on grant for egg and poultry enterprises will also not apply.
Noble Lords will also wish to know that, in addition to providing the higher rates of grant, we are relaxing a number of statutory and administrative rules. I have already mentioned to your Lordships those relating to limits on expenditure. Others are the requirement to obtains prior written approval; the requirement that the income from the farm business must reach a certain level; and the special income test governing eligibility for the higher less-favoured area grants. In addition, certain tests usually applied to horticultural grants, such as an appraisal of the value of the investment to the business and the need for the business to have been in existence for at least 24 months to qualify for grant, will also not apply under these arrangements. Furthermore, my Lords, in the badly affected areas, we shall not apply the normal administrative rules relating to written prior approval for work to items which, although not covered by the Schedule to this Statutory Instrument, are nevertheless included in the main Farm Capital Grant Scheme. I refer to works and facilities such as electricity or water supply installations in their own right. Such items, however, will not attract the special rates of grant.
I must explain to your Lordships that this scheme, even more than the earlier Variation Scheme, breaks new ground, and for this reason contains some special features to ensure proper administration. Noble Lords will notice that the winter period is defined as extending from 1st October, 1977 to 31st Marsh 1978. However, only expenditure incurred on or after 1st November 1977 will qualify for the higher grants or exemption from the normal rules. Moreover, we need to be able to ensure that the higher grants are given only for buildings and other works
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destroyed or damaged by the abnormal weather of the past winter. For this reason, we require written intimation by 31st July 1978 that the farmer or grower considers that he suffered damage from those storms. This would enable inspection to be made to determine with reasonable certainty that we are dealing with genuine applications. I am sure that your Lordships will appreciate the importance of this. Formal applications may, however, be submitted up to and including 31st July 1979. This should give farmers or growers adequate time to prepare the detailed plans and specifications that may be necessary; but, as was the case for the first Variation Scheme, we have set a time limit for completion to encourage farmers and growers to get on with the necessary work quickly. We hope that applications will be submitted as soon as possible. I commend this scheme to the House and trust it will receive full approval.
Moved, That the Farm Capital Grant (Variation) (No. 2) Scheme 1978, laid before the House on 6th June, be approved. —(Lord Wallace of Coslany.)
4.52 p.m.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Wallace of Coslany, for explaining the order which is now before the House. I think the difficulties that the Government have been up against in regard to the timetable are well appreciated on this side of the House, and I think it is a matter of congratulation that they have been expeditious in handling claims. My remarks will be related to questions concerning the rather longer term. Your Lordships will be aware that Article 92(2)(b) of the Treaty of Rome (which has been referred to already in the speech of the noble Lord, Lord Wallace of Coslany) permits special treatment to be given to those who have suffered loss or damage as a result of special weather conditions. But one must think particularly carefully about the question of weather insurance here.
I should like to draw your Lordships' attention to the Answer to a Question for Written Answer in another place on 22nd March 1978. It is not long and perhaps I may quote it. The Answer is from the Secretary of State for Scotland and the words are:
"It is, of course, a firm principle that the Government do not pay compensation for losses

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due to natural hazards, especially in food production where the weather is a factor to be taken into account every year; nor do they cover insurable risks."
That is in the Official Report for 22nd March 1978, at cols. 554 and 555.
The Secretary of State at that time had not the advantage of this order in front of him. Nevertheless, there are very significant words there. Those are the closing words which he used:
"… nor do they cover insurable risks."
In the longer term undoubtedly it will be a matter in discussion for the Minister of Agriculture and the National Farmers' Union in this country to investigate in some depth the question of what are insurable risks and what are not insurable risks in this regard.
Unhappily, the definition of "abnormal weather conditions" is something very difficult to be achieved. In the particular cases referred to by the noble Lord, Lord Wallace of Coslany, these have been identified. But, if I may respectfully suggest this to your Lordships, some weather conditions affect particularly the agricultural areas affected by high tides. These are particularly subject to the problems which occurred during the East Coast floods of some years ago, and it is a matter of continuing anxiety that a situation may arise where sea walls, dykes and sea defences may be breached in some future tidal conditions.
I hope that the Government will give special attention to this area. From these Benches we welcome the relaxation of the rules, particularly as they regard the question of written prior approval and also the special income test governing eligibility. These appear to be both practical and sensible arrangements and to assist particularly in regard to early payment where need is a paramount factor. I should like to thank the Government for their expeditious handling and I hope that they will continue to pay close attention to what advice is given them by the National Farmers' Union in this country.
4.57 p.m.
Lord WALLACE of COSLANY: My Lords, as far as I can at short notice, I should like to reply briefly to the noble Lord, Lord Saydys. The question of insurance has come up again. It was raised
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in another place, So far as insurance is concerned, it has always been the Agriculture Department's policy to accept the industry's normal practice on insurance. Thus, for agricultural buildings we expect insurance only against fire and, therefore, we would not expect farmers to be insured against storm or flood. If any insurance payments are received they would be offset against the cost of the work, as only expenditure actually incurred by the applicant can be eligible for grant. So far as growers are concerned glass houses and similar structures are normally expected to be insured against storm damage and any insurance payments, therefore, will be offset. It is not normally possible, as I have already said, for other farmers or growers to insure against flood. That is generally the position on insurance. If there are further detailed points on this, I will be pleased to advise the noble Lord and will endeavour to give him an answer to his question of flood in future disasters.
It is difficult to take practical steps against the occurrence of abnormal weather of any kind other than to ensure that meteorological warnings are given as early as possible. That is the job of the Meteorological Office. In passing—and I have seen some of this in operation at Bracknell—I believe that there is very close contact between the farmers and the special services for farmers in giving warnings of unexpected bad weather in particular. The British Isles are susceptible to sudden changes which are difficult to predict. That is the "statement of the year" considering the present summer. These may be in both the type of weather and its severity. Standards of building and other facilities are constantly being improved, but it would be impossible to provide them to a strength that would withstand every weather condition.
So far as sea flooding is concerned, reviews by the water authorities in England and Wales and by the Ministry are continuing. A number of schemes for improvement are either in progress or are being designed. In other cases, work is being speeded up so as to seek completion before next winter's storm tide season. It is a fact that extra financial assistance is being provided for sea defence work. The Chancellor of the Exchequer announced in his Budget Statement that additional

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allocation will be made for sea defence work this year. The sum involved is £2 million which has now been allocated to water authorities. With grant rates of up to 85 per cent., this will result in additional Government expenditure of about £1¾ million this year. So far as possible, the Government are doing what they can. If the noble Lord wishes to raise matters later I shall be only too delighted to give him the information.
On Question, Motion agreed to.

ECC 32nd REPORT: COMMUNITY SHIPBUILDING INDUSTRY
5 p.m.
Lord RHODES Lord RHODES rose to move, That this House takes note of the Thirty-second Report of the European Commmunities Committee on the reorganisation of the Community shipbuilding industry (R/3216/77) (H.L. 188). The noble Lord said: My Lords, in moving that this House takes note of the Thirty-second Report of the European Communities Committee on the reorganisation of the Community shipbuilding industry, it is with the knowledge that there are people in this House who know more about the subject than I do, and I crave their indulgence. The noble Lord who chairs our Committee so efficiently must have been very persuasive to get me to agree to move this Motion. May I pay a tribute to him for the way in which for so long he has run that Committee so efficiently.
This is a sombre subject. I cannot cast it better than the shipping correspondent of The Times for this morning:
"As the slump moves into its fifth year—"—
he is talking now about shipowning—
"the longest ever recorded—with freight rates insufficient to cover even operating costs, more shipowners are facing financial collapse with every month that passes. Governments already struggling with unemployment and bankruptcy in the shipyards are faced within the next two years with widespread collapses among shipowners and erosion of national shipping assets disposed of at knock-down prices "
If shipowners are not prosperous, one cannot expect orders for ships.
May I say a word of praise for what the Community have done in this connection. Sitting on this Committee, as I have done for several years, I have seen
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the attempts that the Commission have made to grapple with the problem of unemployment in the shipbuilding industry. I remember years ago I suspected that a document had been written by a young man just out of Oxford who had taken the job on at the Commission. He had put in all sorts of things which, if the document had gone through, would have meant political dynamite because he was talking about closing shipyards in Jarrow and Barrow.
We took a lot of painstaking evidence, written and oral, from all who are vitally interested in this subject. Our attention was drawn to the appalling state of affairs in the shipbuilding industry, not only in the Community but in the world. They drew our attention to the fact that never in the history of the industrial revolution has there been such a spate of orders placed for ships as in the years 1968 to 1973. In 1973 alone there were placed orders for 73 million tons. In 1975 the completions were running at 34 million tons. In 1976 the completions were high and then, as a result I suppose of the recession in world trade and the OPEC difficulties, the bottom fell out of the market. It is estimated at the present time that the excess production capacity in the world will be from 45 per cent. to 50 per cent. Not only that: there is still a backlog of orders of ships to come on the market.
In Europe it was traditional until the end of the 1950s that they built 70 per cent. of the world's fleet. Now it is from between 20 per cent. and 30 per cent. Japan, with its ruthless efficiency, now builds half the world's ships, but even Japan is in difficulties. I do not know whether noble Lords saw the item of news in the papers last week, which stated that a citizen of Hong Kong, a big shipowner who was honoured in recent months in this country, was reputed to have bailed out Tasebo, one of the big shipping companies in Japan, by placing orders there. So the difficulty is world-wide. New dynamic countries like Brazil, Korea and Mexico are all coming into the market to build ships. These countries, with a sense of purpose and centrally controlled, seem to have no difficulty in undercutting Western prices. Anyone who saw the television programme on ITV on South Korea could not fail to be impressed by what can be achieved by a sense of purpose.
What is the situation in the United Kingdom? The United Kingdom shipbuilding industry consists in the main, as I understand it, of British Shipbuilders and Harland and Wolff. Twenty per cent. of the annual merchant shipping output is sold to British shipowners which, incidentally, is 30 per cent. of the normal requirements. So the United Kingdom is, as a matter of course, a net importer. Between 1950 and 1975 employment in the British shipbuilding industry dropped by 45 per cent. Nevertheless, the industry has managed to survive on the basis of 1·2 million gross registered tons per annum since 1950. This decline has been accepted by the Government as a very important part of the difficulties that we are facing today, and there is the shipbuilding intervention fund of £65 million to assist the industry; and this year we have passed the Shipbuilding (Redundancy Payments) Act.
This communication we have received is known as the Davignon Act on the Continent. It is refreshing to see that he is a man of some energy, really trying to get to grips with the problems with which he is faced. He asked the Associated Western European Shipbuilders to make a forecast. They did so. The Associated Western European Shipbuilders comprise the EEC countries, Finland, Norway, Sweden, Portugal and Spain—a large organisation. They made a proposal that in 1980 the world would be building 12 million tons of ships based on the compensated formula. It would be 4 million for Japan, 4 million for Europe and 4 million for all the other countries, including South Korea, Brazil and Mexico. There will be 4 million for Europe; that is, for the Associated Western European Shipbuilders, of which 2·4 million tons would be the share of the EEC.
The communiqué also went into some detail as to what should be done with regard to making the industry more efficient and more competitive in world markets and, in so doing, hoping to supply a significant amount of ships required by the Community shipowners. I said before it is a serious attempt to get to grips with the problem and it should not be underestimated. What would it mean? It would mean a reduction in the existing capacity of some 4–6 per cent.; it would mean the loss of 75,000 jobs in
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shipbuilding alone; it would mean the loss of 30,000 jobs in the ancillary trades —not small beer, by any count. We do not know what the figure would be for this country as yet. The communiqué also makes nice, satisfying noises about re-training, re-deploying and stimulating demand by various means. It refers to safety regulations, to building more sophisticated ships and thereby taking on more labour; altogether making out that it is possible to do something along those lines. I hope it is.
I talked about the forecast of four for Japan, four for Europe and four for everybody else. How were those forecasts arrived at?—because before we can assess what they are getting at we need to know the criteria on which they were based. The first assumption was that 4 per cent. would be the growth rate for most countries in Europe. The second assumption was that the OECD would have a tremendous lot of influence in terms of international arrangements; but anyone reading his paper this morning or last week would know very well that the OECD meets in Paris tomorrow, and one of the items on the agenda is a complaint by Japan that the European nations have not done their share in terms of reaching an understanding about how much of the shipbuilding industry in Europe is redundant. So there is difficulty there. We can assume, too, that there is going to be no 4 per cent. growth on average over Europe: it will be more like 1 per cent. during the next two or three years.
Another assumption was that no countries other than Japan or countries in Western Europe would produce more than they are now. That is a ridiculous assumption. How can you curb what South Korea is doing? They are already going ahead to double their production in two years' time. The next assuption was that the proportion between members of the AWES and the EEC should remain at the same sort of ratio. That is also a very difficult thing to grapple with, because there is the question of what is our share and what is agreed to be done. These difficulties are enormous and should be approached with great caution.
There are also objections to what have become known as indicative targets. It was pointed out that the shipbuilding

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industry is cyclical. I do not know what opinions your Lordships have about that, or whether you think that the old cyclical trade movements apply any more. Personally, I do not. I do not think it is quite the end of the capitalist system yet, but I am perfectly certain that it is the end of Keynes. The second objection is the problem of dividing capacity among Member States. The shipowners who gave evidence to us were quite definite in their minds about what should be done. They agreed straight away that the production capacity should be curtailed because, after all is said and done, if they cannot get trade for the ships they have, what hope is there for ships that will be coming on the market? That is a quite legitimate question. Strategic considerations, too, were put up to us but I will not deal with those because they are outside the Treaty of Rome when it comes to military hardware.
The Committee noted in its findings that the general agreement on the Commission's analysis of the world situation was correct. The Committee believed that the Commission's objective to create a competitive European shipbuilding industry was also correct. The Committee also expect that national arrangements will still continue, such as "scrap and build". They also consider that the Community policy is highly desirable. The anxiety of British shipbuilders to survive and become competitive are not incompatible with negotiations conducted with the Community. Here may I say that we must get into our heads that the Community is our hope in terms of world negotiations. We cannot negotiate from our base any more and it will have to be done on a Community basis. If anyone wants a real example of how this works, let him look at the multi-fibre agreements, which have been so successful over the last two years. We really must get it into our heads that it must be through the Community that we make our case.
If there is no agreement in the Community itself, or if national programmes are pursued which conflict with Community policy, how can the Community make the world-wide negotiations that it should be making? It is a terribly serious business, this unemployment, for anyone who cares about our people and our
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country. And where are the serious efforts which are being made to think it through? My Lords, this is one; and I beg to move.
Moved, That this House takes note of the Thirty-second Report of the European Communities Committee on the reorganisation of the Community shipbuilding industry. (R/3216/77 (H.L. 188).—(Lord Rhodes.)
5.20 p.m.
Lord CAMPBELL of CROY: My Lords, the House will be grateful for the helpful introduction to the Thirty-second Report of the Select Committee by the noble Lord, Lord Rhodes. He speaks from a lifetime's knowledge of industry, and he himself has always displayed the greatest vigour in promoting British interests. He also has the experience of seeing at close hand the contraction of the textile industry in the North of England. At that time we were both Members of another Chamber; I was an observer, but he was right in the thick of it.
The report which we have before us draws attention to a meeting of the Council of Ministers on 27th June. In fact, the Council met and briefly discussed this subject, but has referred it to the permanent representatives in Brussels and, I understand, is due to consider the subject again on 25th July. So that this debate is still in time, before ministerial decisions are taken. I agree broadly with the conclusions of the Select Committee and I should like to deal with the subject in two parts: first, the world crisis in shipbuilding; and, secondly, the position of the United Kingdom; and I propose to put certain questions to the Government.
This is probably the only opportunity which Parliament will have of considering this subject in either Chamber before November. The analysis of the world situation is, I think, virtually agreed. There are already too many ships in existence. Nearly one-tenth of the merchant fleet is lying idle; I am not considering warships, because the building of warships is not included in this report. World shipbuilding capacity far exceeds the expected demand over the next seven or eight years, and it is two or three times larger than is necessary. I say "seven or eight years", because that is as far ahead as the General Council of

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British Shipping felt they could see ahead. The Western countries, including the partners in the EEC, are also at a disadvantage compared with other shipbuilding countries, because the labour costs are less, sometimes considerably less, in the Far East and elsewhere. I suggest that an orderly reduction in world shipbuilding, none the less, must be to everyone's long-term advantage, even countries such as South Korea who feel that they want to trade their own goods, in their own ships, built in their own yards. That is a short-term view.
The arguments which arise are three: first, how much should the reduction be; secondly, how is it to be done and, thirdly,—and perhaps most difficult of all—how is it to be shared between the shipbuilding industries? The process of negotiations continues this week, as the noble Lord reminded us, at the OECD in Paris. There the Western countries and Japan are mainly negotiating. All the shipbuilding countries in the world are not members of the OECD. Outline agreement with Japan, however, if it could be reached, would be a very useful start. I say "outline", because exact reductions in percentages will be difficult to secure. There is bound to be much haggling over the last percentage point where each individual country is concerned. Within these worldwide negotiations, co-ordination within the EEC is sensible and should be helpful. That is where the Commission and our Select Committee are agreed.
Where the Commission can be faulted—and I agree with the Select Committee on this—is that they have taken some assumptions, most of them apparently conjured out of the air, and tried to prescribe a precise formula upon them. In their communication of last December, they based their proposals on an estimate of 2·4 million compensated gross registered tons as being required to be produced within the EEC in the early 1980s. Those proposals would mean reducing the capacity of shipbuilding within the EEC by no less than 46 per cent. since 1975—that is, almost halving the capacity—and I am not talking about jobs. Jobs, of course, would be reduced on a larger scale. There are too many variable factors to make such precise forecasts possible.
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Moreover, there are more considerations than have been taken into account by the Commission to be able to advocate so exact or certain a reduction. For example, I believe that the industry is cyclical by nature—a point which the noble Lord raised. My guess is that there will be an upturn in the mid-1980s. Even if, eventually, one managed to smooth out the cycles, the great swing that there was in the early '70s is bound to lead to another swing in the mid-'80s. There are also strategic considerations. The noble Lord desisted from mentioning them, but I think they must be mentioned, because they should be given more weight than the Commission have allocated to them.
When assessing the EEC's capacity and possible reductions in the 1980s, we must not overlook three new applicants to the EEC—Spain, Portugal and Greece; and in particular Spain. She will add significantly to the potential capacity when she joins the EEC, as I feel she will, in the near future. Most of the additional capacity in the 1960s and 1970s came from countries outside the EEC, notably Japan, South Korea and Brazil, and it is a valid argument that those countries which expanded inordinately during that period should bear the greater share of the reduction in the world which is now necessary. This applies particularly where the United Kingdom is concerned, because our capacity remained about the same, static, during that period. So that it would be unfair for us to be asked to reduce to the maximum amount, when we were not responsible for the speculative expansion which has occurred in the last 10 years.
As regards the general proposals of the Commission, I agree that there should be full use, where there are redundancies in shipbuilding areas, of the European Social Fund—for retraining, in particular, where it has helped in the past—and of the Regional Fund in those areas, for helping development and alternative jobs. Where it is not possible to agree with the Commission is in the precise amounts, because it is not possible, I believe, to make such an exact forecast as they have done.
My noble friend Lord Bessborough is the draftsman for the Committee of the European Parliament on Budgets, and in his interim opinion he has drawn attention to the massive sums which would be

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required if the proposals went forward on the scale suggested by the Commission. He has pointed out that there has been no proper consultation yet in the European Parliament of the effect that this would have on the Budget. My noble friend is with us today and I look forward to hearing him, if he speaks in the debate. But he made these points: first, that there appeared to be no basis for the cost per man in the calculations of the Commission in their communication; and, secondly, he asked why should a new job for replacing a redundancy in an ancillary industry cost half as much as a new job replacing one in the shipbuilding industry itself. That seems to be a quite arbitrary part of the calculations which the Commission have produced.
I come to the strategic part which particularly affects Britain. We have three former shipbuilding firms which were specialists in warship building—Vickers, Vosper Thorneycroft and Yarrow—and there are another three firms whose services are needed for naval shipbuilding but which also build merchant ships. So far as I know, the work of all six companies continues on the same lines under British Shipbuilders, all six companies having been nationalised. The naval demand should be much more in line with the capacity of our yards when one takes into account the exports in which we are successful—building ships for other countries, in particular Commonwealth countries.
The first question which I should like to put to the Government is this: Is it true that the Government are starting a scheme for building warships "on spec" and without individual orders, on the basis that they might find a place for them in our Navy, if they are not needed now or are not ordered eventually by a foreign country? There is another consideration—a strategic one—and that is the size of our merchant fleet. That size, and the building capacity for it, should not sink to dangerous levels where we could be held to ransom for supplies in peacetime, or could be seriously weakened in our carrying capability in war.
Now I turn to the British shipping industry because they are the customers, especially of our shipbuilding industry. May I remind the House that our shipping
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industry normally comes third in size in the world, and sometimes fourth. Japan and Greece are ahead; Liberia is the other one, but, as we all know, that is what is known as a flag of convenience. My point is that we are near to the top of the world league table so far as our shipping industry is concerned. There are many other industries in Britain where we are not in the top 10, but so far as the ownership and operating of ships is concerned we are near to the top. Our shipping industry brings in an enormous sum of money in terms of invisible earnings, in addition to the other advantages for our economy.
Over recent years, the United Kingdom shipping industry have placed 70 per cent. to 80 per cent. of their orders with the domestic shipbuilding industry. They have been a good customer of the United Kingdom shipbuilders. Consequently, the view of the shipping industry is important. The United Kingdom shipping industry have made it very clear that they consider that a reduction in shipbuilding capacity in Europe is necessary. Like others, they do not attempt the precision of figures that is aimed at by the Commission, but they regard overcapacity—the production of ships that are not wanted—as a threat to them. This leads to ships subsidised by the Government, as a consequence artificially cheap, being bought by competitors which can then undercut on freight charges during the lives of the ships and so capture United Kingdom business.
Returning to shipbuilding, the British shipbuilding industry is now about 90 per cent. nationalised in British Shipbuilders. In this connection I have more questions to ask the noble Lord. Recently we had passing through this House a Bill which became the Redundancy Payments Act. It provided for schemes of redundancy payments to men who were made redundant in British shipbuilding yards. Since that Act was passed, nothing has been announced. Therefore, may I ask the Government what is the latest position? When can we expect to hear of the first schemes under that Act? Thirdly, how will those schemes fit in with the EEC policy which has been put forward?
I turn next to the financial duties which have been imposed under Section 10 of the Aircraft and Shipbuilding Industries

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Act. Only last week, at col. 114 on 4th July, the Secretary of State for Industry set out in another place the financial discipline for British Shipbuilders during the current financial year. He instructed them to seek to limit their losses in the current year to £45 million. I should add that that figure appears to have been arrived at simply because that is British Shipbuilders' present estimate of what, tentatively, their loss is likely to be in the current year, but it assumes the availability of the announced intervention fund.
That brings me to subsidies. The intervention fund to help British Shipbuilders to obtain orders was announced last year, and both last year and this year limits have been set. The fund continues on an annual basis, and I am glad to say that it has been accepted as respectable by the EEC Commission and is not considered to be out of line with competition policies. The intervention fund is acceptable in crisis conditions, in accordance with the Fourth Directive. The United Kingdom is applying also for blessing from the Commission for a further subsidy scheme. This was reported in The Times, in one of the articles mentioned by the noble Lord, Lord Rhodes. Therefore, I put a further question to the Government: Unless the answer is confidential, can the noble Lord tell us what is the further subsidy scheme for which the Government are now trying to obtain the agreement of the Commission?
My last question to the Government is this: What are they themselves doing to encourage development in the shipbuilding areas so as to increase available alternative jobs? The Government have accepted that redundancies are inevitable, although they have not yet announced where they may take place. I hope, as I am sure that all Members of this House will hope, that any necessary redundancies will be carried out as painlessly as possible. The problem of additional unemployment occurring in areas where there is already a very high rate of unemployment is one which this House looks on with grave anxiety.
The subject of compensation for nationalisation is highly relevant here. Some of the firms which are due to receive compensation are in a position to invest and diversify in the areas concerned.
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That is where they have been operating in the past. May I ask the Government what is happening about compensation? The first significant news announced during the last few days was agreement on compensation for Swan Hunter. That appears to be the first compensation which has been agreed. Only a few weeks ago the noble Lord, Lord Robens, the chairman of Vickers, pointed out that formal negotiations for compensation in the case of his company had not even started and that as a result his company's investment programme was one-third less than it could have been.
There was much debate about this question over two years ago, especially in this House. The issue was not only fairness but also the loss of potential investment, probably in the very areas where new jobs are most needed. Therefore, may I ask the Government to give us the latest information they can about the timing of compensation negotiations, bearing in mind the assurances which were given from that Bench during the passage of the Aircraft and Shipbuilding Industries Act. I think no one will remember those assurances better than the noble Lord, Lord Winterbottom.
To sum up, I think the Government should aim for agreement on orderly reduction in world capacity in shipbuilding. They should participate in the co-ordination which will be necessary within the EEC but they should retain flexibility and resist commitments to precise targets years ahead.
Lord ARDWICK: My Lords, I did not want to interrupt the noble Lord in his speech but before he sits down I should like to ask him a question. In this House we are all concerned about the interplay between this Parliament and the European Parliament. The noble Lord mentioned the report which the noble Earl, Lord Bessborough, has prepared; I wonder whether he has also had access to the report which was prepared for the Economic Committee by my honourable friend Mr. John Prescott and to the report of the Social Committee. If he had, he would have seen that many of the questions that he put this afternoon are embodied in those reports to the Commission and indeed if he had been able to read the report of the debate

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(which he could not have done because the three-hour debate took place only on Wednesday and the reports arrived this morning) he would have seen that Viscount Davignon, the Commissioner responsible, gave a precise answer to the very question that he raised about why there was a projection of twice as much for people in shipbuilding who are displaced as for those in the ancillary industries. The simple answer is that shipbuilding machinery cannot be used for anything other than shipbuilding whereas the ancillary industries employ machinery which is applicable to other forms of engineering.
Lord CAMPBELL of CROY: My Lords, I regard that as an intervention; I think it was enabling me just to answer that and to finish my speech. Those points are really for my noble friend Lord Bessborough. I was able to read his report some time ago but curiously enough I have the complete record here of the debate which took place on the 5th July. Of course I have not been able to read it all, nor have I been able to read all the debates, but I have read what the noble Lord's friend Mr. Prescott said. From what the noble Lord has said, it appears that I have been asking all the relevant questions. Some of the answers may be available when we get round to seeing what the Commissioner, Viscount Davignon said, but I only received the record today and, as it is a long one, I have not yet had the opportunity wholly to consider it.
Lord ARDWICK: My Lords, unless the noble Lord's Danish and Dutch and German are as good as his French, he would not be able to read this report because it only exists in those particular languages. That is one of the disadvantages.
Lord CAMPBELL of CROY: My Lords, I must not abuse my opportunities of speaking and giving way. I would only say that my noble friend Lord Bessborough had told me that if I could follow French and German I should be able to understand most of it, and fortunately I am able to read both those languages.
Lord BRUCE of DONINGTON: My Lords, with the leave of the House I
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should like to ask the noble Lord one question arising from his speech. Did I understand him to say that 80 per cent. of the requirements of British shipowners were supplied by the shipbuilding industry? That is what I understood him to say, but perhaps he will correct that if necessary.
Lord CAMPBELL of CROY: My Lords, I am very glad to say that. The General Council of British Shipping have said it themselves and also the Government have said that in recent years the percentage has been between 70 and 80 per cent., but more recently it has been nearer 80 per cent.
Lord RHODES: My Lords, I should just like to correct that. The figures are that the shipbuilding industry is supplying ships to the Merchant Navy. They supply 80 per cent. of the shipbuilding capacity but that only represents 30 per cent. of the requirements of the British Merchant Navy. So, as I said in my speech, that results in the position that we are net importers of ships.
Lord BRUCE of DONINGTON: My Lords, I should like to enlarge on the point that I made to the noble Lord. I think that the noble Lord, Lord Campbell of Croy, is in fact misinformed. If he will refer to the Select Committee report, he will see that it says:
"Up to 80 per cent. of the industry's annual merchant output"—
that is, the shipbuilding industry's output—
"is sold to British shipowners, representing about 30 per cent. of their total requirements",—
30 per cent. of British shipowners' requirements—
"thus the United Kingdom remains a net importer of ships".
Lord CAMPBELL of CROY: My Lords, I am very grateful for that correction. Of course it is that way round: it is that the British shipping industry is responsible for nearly 80 per cent. of the orders to the British shipyards and if I said it the other way round, I apologise.
5.46 p.m.
Viscount SIMON: My Lords, I too should like to say how grateful I and my colleagues on these Benches are for the exposition which the noble Lord, Lord Rhodes, has given us of this very useful

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report and to say how much I agree with him that the Commission's communication is a most valuable document. I had wondered what they had been doing but I was glad to hear that they have been going into this subject for some time. When the document came before us I thought it was rather late in the day, but it is satisfactory to note that the Commission have this very well in their sights and are taking steps to tackle the subject. As the noble Lord has said, it is quite impossible for us because, although I am happy to say that we are still a great shipping country and a not insignificant shipbuilding country, we cannot negotiate these things on our own.
In Britain we have already recognised that there must be a substantial reduction in our shipbuilding capacity. This was explicit when we were engaged in the nationalisation of the shipbuilding industry and it was even more explicit when we passed the Redundancy Payments Act. It is true of course, as the noble Lord said, that we in Britain have not increased our capacity for many years and, as British Shipbuilders said in their evidence—and I think it is worth repeating; your Lordships will find it at page 3 of the evidence—
"The present size of the British shipbuilding industry is modest in relation to the needs of a maritime nation strategically dependent on the import of most raw materials and a large volume of foodstuffs".
In that connection, I hope the noble Lord, Lord Rhodes, will forgive me if just question what he said about the strategic position. It is quite true, as he said, that warships are excluded from the matter which is under consideration, but we have a strategic need for merchant ships which is not shared by all other countries because they are not all islands like Britain—and islands with a very small native production of what we need for our industries.
Lord RHODES: My Lords, I agree entirely with what the noble Viscount has said. The remit that we had was for merchant ships, having in mind that the strategic element is not included in the Treaty of Rome, but I agree that it is a most important part of the question.
Viscount SIMON: My Lords, I fancy that the noble Lord and I are using the
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word "strategic" in a slightly different sense, but nevertheless I take his point. As the noble Lord, Lord Campbell of Croy, pointed out, because we have not increased our capacity we are in a good position to argue that it would be quite unreasonable for us to suffer the same cut as everyone else (and particularly some of the big industries that have latterly grown so large) when the time comes to agree internationally to some reduction. I think we shall find it politically very difficult to get our way in this. It is manifestly fair to us, but I am not sure that the other nations will think it is manifestly fair; they may have other points of view that they will put forward. In the end, I have a nasty feeling that, however reasonable this is to us, we shall find it very difficult to achieve, and we may have in the end to choose between accepting an unfair reduction or getting no agreement at all. If it comes to that, it is not going to be an easy decision to make.
I should like to make one point with regard to the 2·4 million compensated gross registered tonnage target. Here did have an advantage over the noble Lord, Lord Campbell of Croy, because I read Viscount Davignon's speech last week in the European Parliament; thought he made it perfectly clear that it had been misunderstood, that it was not put forward as a target but merely as a basis upon which to discuss a broad principle. If the noble Earl, Lord Bessborough, is able to intervene, I am sure he will be able to tell us about that, because he was at the meeting of the Parliament. I should like to turn now to another aspect of the Commission's communication which we have not touched upon very much. When I came to page 9, I was very pleased to read the statement:
"The first objective of Community policy on shipbuilding must be to make our yards competitive in the world market".
I regard that as a splendid positive statement. But here again it is, surely, a very difficult thing; as the Committee's report says, the desirability of this aim is obvious but they do not make any suggestions about it. Presumably, the intention is for the new shipbuilding committee, which it is proposed to set up, to follow this up and put forward detailed suggestions later on. But I must say that I find it very difficult to see how the shipbuilding industries of Europe are going to get

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themselves really competitive against people like the South Koreans. You have an enormous divergence in hourly rates of pay and in hours of work.
There is some talk about re-equipment and modernisation. We have done a lot of re-equipment and modernisation in our yards, and no doubt some are better than others, but on the whole the British shipbuilding industry is now in very good shape. Further modernisation and re-equipment can be done, I regret to say, only for the purpose of doing more by machines and less by the labour of people, which is again a very sad thing in the present state of our labour market. Perhaps our best hope is that improved industrial relations, which we were promised as one of the pay-offs of nationalisation, will lead eventually (dare we hope it?) to a single union in each yard. That, I believe, would make more difference to the cost of producing our ships in British yards than any other single factor.
I should like to say a few words about stimulating demand, which is again one of the objectives the Commission place before us in their document. I was interested to read in The Times this morning of a scrap and build scheme upon which it appears high hopes are being placed. I hope perhaps the noble Lord, Lord Inverforth, when he comes to speak, will be able to tell us something about that. It would be a splendid thing if we could get a scheme agreed. There have been a number of attempts, I understand, over the past few years, but they have all failed. A good scrap and build scheme—that means scrapping at least two ships for building one—could make a great difference both to the shipping industry and to the shipbuilding industry. The particular thing which is suggested—I do not think it is actually proposed—in the Commission's document is something different. That is the possibility of accelerating the fitting of segregated ballast tanks to existing tankers. We spoke about this in your Lordships' House in January of this year, when discussing the subject of pollution, and I think we agreed with both the shipping industry and the Government that, so far as pollution is concerned, this is not worth while, or rather not worth the money it would cost, because the effect on pollution would
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not be very great and the cost would be enormous.
However, what the Commission have suggested is something much wider than that. Normally we—certainly we on these Benches—deprecate finding temporary work for ailing industries rather than facing up to the need to contract them. But I think that in this case there are special circumstances which deserve to be considered. If it was possible by some magic wand to produce almost immediately a shipbuilding industry of the right size to deal with our needs in five years time—not only to deal with our needs but even to build the ships that we think we ought to be able to build, for ourselves and to sell abroad—that industry would still face five years of under-employment because of the great surplus of ships existing today. That being so, it seems to me there can be a case for a temporary job, like the fitting of segregated ballast tanks which will occupy the shipyards.
It will, incidentally, take ships off the market; first, the number that go off to be fitted, and then, when they come back, they have something like 15 per cent. less capacity. This might have the added effect of improving the freight market, about which the noble Lord, Lord Rhodes, spoke so feelingly; it is really in an abysmal condition and any little improvement would be a Godsend to shipowners. Might it not be worth while looking at this proposition, which would do all these things at the same time?
I was interested to see in the Commission's paper that in fact there are studies going on to look at the cost-benefit analysis of this kind of job. The cost to the British industry alone, your Lordships may remember, we were told, was about £150 million. That is a terrible sum of money; I do not believe any of your Lordships can really conceive what it is—unless by any chance one of the ex-Governors of the Bank of England is here, which I do not think is so. The only way we can get any conception of a figure like that is to see it in its context; what are the other figures in relation to this operation, what are the earnings of all these ships, what are their other expenses, what is the cost to the oil industry? I suspect that the oil industry, which managed somehow to get over a

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nearly four-fold increase in the price of oil a few years ago, would manage to get over a small increase in these abysmally low freight rates without really feeling it at all.
So I do hope that the Government will consider following up this idea to which the Commissioners have drawn attention, and which they tell us is being examined at the present time, I am not sure by whom. It is on page 19 of their report. They simply say:
"The introduction of such measures, the time taken to bring them into force and their scope, should depend on the cost-benefit studies currently being made".
I suppose they are being made by the Commission. May I close by asking the noble Lord, Lord Winterbottom—although I do not suppose he can reply to it today—to take that idea into his mind, and perhaps find out and let us know whether the Government will follow up that idea. It may be that, when the studies are done, it will be found to be completely uneconomic. I would say, if the scrap and build scheme I referred to earlier turns out to be a winner, it would probably be a much better way to do it. But I think it is worth considering this other proposition which has been put forward, tentatively, I think, by the Commission.
6 p.m.
Lord TREVELYAN: My Lords, I am most grateful to the noble Lord, Lord Rhodes, for having agreed, at my request, to introduce the report of the Sub-Committee which was afterwards approved by the Select Committee. He has given an account of the problem in his usual very forthright and clear manner. I especially felt moved by the portion of his speech which dealt with the human problems behind this matter. I can do little except perhaps sum up the views of the Commission and the Committee and some of those who gave evidence before us. That may be of some use although I fear that I shall be rather repetitive.
This is an extremely difficult problem which I fear will be with us for a long time and which I think we shall probably discuss on many future occasions. It is not our business in this debate to deal directly with the question how the shipbuilding industry will make itself competitive, although that is the centre of the
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affair. Our purpose is to form a view on the Commission's proposals and to determine how far the Community can be helpful to the industry in the present deplorable condition of world shipbuilding.
The Commission aims at a co-ordinated approach which will include a 45 per cent. contraction of the industry; a form of adaptation to future demand designed to make the industry competitive without assistance; redeployment of excess labour outside the industry; and the stimulation of demand by the introduction of antipollution, safety and social regulations. We have heard a good deal about those matters from the previous speakers. For these purposes the Commission proposes the co-ordination of aid—a matter which has already been dealt with in the fourth Directive—the use of the Regional and Social Funds, and loans by the investment bank, and a high level committee to monitor development of policy.
I should like to sum up some of the evidence that was given to the Committee. British shipbuilders want the continuation for a period of the intervention fund, but are confident that in the long term they can face competition without aid. They do not accept the indicative figure of production proposed by the Commission, as they consider that there is at least a chance of the situation improving in the early 1980s. They suggest that an industry of about the present size, that is, with a production capacity of about 1·2 million, gross registered tonnage (GRT) a year will be viable. The unions generally support the views of the shipbuilders and seem to come near to advocating a policy of subsidy with protection against non-EEC ships.
British shippers consider that a policy of maintaining a higher output than is justified by market conditions would have a disastrous effect on the shipping industry by exacerbating the problem of shipping capacity. They therefore support the ideas of the Commission. They were very firm and forthright about it. In the light of the evidence submitted by the Ministry of Defence, the Committee accept that a merchant shipbuilding capacity of a moderate size is necessary for strategic reasons, not least in support of the naval programme.

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The Government do not accept the Commission's figure for the reduction of capacity, but do not rule out a Community shipbuilding policy. There is general agreement on the Commission's analysis of the present state of the industry in the world as a whole. Your Lordships have heard from the noble Lord, Lord Rhodes, that the Committee believes that the objective of the Commission's communication, to create a competitive European shipbuilding industry which can meet a significant proportion of the Community's requirement for ships, is correct and will be widely accepted. It does not doubt that national policies to meet the crisis, within the frame work of the fourth Directive, will continue and that other measures such as scrap and build programmes, may be adopted by Member States. But it considers that a Community policy, in addition to those national measures, is also desirable.
The aims of the British industry, to survive the slump and to be competitive in the long term, are not incompatible with negotiations through the Community. There may be difficulties in taking such negotiations as far as the Commission's communication suggests, but the Community is an important channel of discussion and should not be neglected. If there is to be an international agreement on shipbuilding capacities, there must first be agreement among the Members of the Community, and there will inevitably be a series of international negotiations through the OECD in which the Community has had a common negotiating position since 1976.
The Committee does not consider that the precise figure of the quantitative indicator proposed by the Commission is sufficiently reliable to be adopted as a firm figure for capacity in the early 1980s, but the Commission's general approach towards reorganisation by reducing capacity in an orderly fashion and increasing competitiveness is correct. It is obviously going to be difficult to apportion capacity among the Member States, but if the Community's industry is forced to contract, that is a problem which must be faced, and agreement between the Member States will strengthen their negotiating position within and outside the OECD.
There is much to be said for the Commission's detailed proposals, although
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they will not solve the major problems. However, these proposals could be usefully developed further during discussions within the Community. The Committee notes the Government's doubts as to whether a senior advisory committee is necessary. However, it considers that a standing body of that type might have a useful role to play in developing an internal Community policy on shipbuilding as well as a common position for external negotiations. In any case, if a committee is established for this purpose, the United Kingdom should surely be represented on it.
The main question is: What conclusions, if any, one can draw? There have been plenty of suggestions from the Committee, but I do not think that at this stage our conclusion can be any more precise than that we should be active on two fronts—within the Community and in our national efforts to make our industry competitive.
6.8 p.m.
Viscount ROCHDALE: My Lords, first I should like to join with other noble Lords who have spoken and thank the noble Lord, Lord Rhodes, for introducing this debate this afternoon. I should also like to thank personally the noble Lord, Lord Trevelyan, who has just spoken, for inviting me to join his Sub-Committee B and for enabling me to take some small part in the study of the communication which we made and in the preparation of the report.
A few years ago, the question which really stems from this whole discussion of the relative capacity of the shipbuilding industry as regards likely orders was one that affected me personally in the work that I was then doing, but it does not do so now. However, I have kept my eyes open as regards this problem since then and it is obviously one of great interest. Two main questions come to mind as regards this matter. First, how has this enormous imbalance in capacity as regards likely orders come about? We have been told that the figures show an excess capacity of 40 to 50 per cent., which is an enormous imbalance. How has that come about? Secondly, how is it that this has not come to a head? I shall not say that it has not been foreseen, because it obviously has been foreseen, but how has it not come to a head sooner than this?

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I should like to deal with the first of those two questions and I must apologise to your Lordships if I tend to repeat some of the figures that other noble Lords have quoted from the report. Undoubtedly the report gives us a number of very important figures and it is generally agreed that those figures come from an excellent source and can be assumed to be correct. However, I, personally, find it difficult to assess their relative importance; I find it very difficult to get an overall picture of the magnitude of the problem. It seems to me that, especially if we accept, as has been mentioned this afternoon, that the industry is a cyclical industry, we want to be very careful not to think that if there were only an upturn in the trade cycle we should return to the satisfactory position of the past. That is undoubtedly not the fact.
Therefore, I should like to look back quite a few years, to the period between the 1950s and 1960s, to remember a few of the underlying changes—which are sometimes forgotton—which have taken place. Some of those changes were of a technological nature; some were of a commercial nature, and no doubt some were of a political nature, although I use the word "politics" in its widest sense and am not talking about British politics.
The first point that comes to my mind and which has given rise to a tremendous gap in the British shipbuilding industry and in other countries' shipbuilding industries has, of course, been the virtual elimination of the passenger liner, which has been replaced by the aircraft. One can virtually say that, apart from a few cruise ships and one or two others, there has for some time now been no new building of passenger liners. Then there has been the tremendous increase in the size of the bulk carriers: the ore carriers, the grain carriers, the coal and phosphate carriers, and so on. That has had its effect. The effect of Suez was to stimulate tremendously the fantastic growth in the so-called VLCCs, the very large crude carriers.
The other quite remarkable development has been the so-called container revolution, the rapid development of which, has, I think, exceeded even the most sanguine hopes of its original protagonists. This has come about due
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to the size and speed of the ships, but more important than anything else has been the tremendous ability to turn the ships round in port in a very short time; one of those great ships can be turned round in a matter of two or three days, whereas in days done by it took many weeks, even running into months. The effect of this is—and this has been quoted to me from very good authoritative sources—that one of these big container ships can be said to displace 10 of the traditional tramp ships of a few years ago.
The one point that has been much raised this afternoon is the fiasco of the tanker situation. I remember very well that towards the end of the 1960s there were some shipyards which were really scratching round for business. Yet, as the noble Lord, Lord Rhodes, mentioned and as is mentioned in paragraph 8 of the report, by 1973 shipowners were jostling for places in the queue so that they could be sure of their orders being placed on the apparent assumption that the increase in the need to convey crude oil round the world would go on for ever. In fact, 75 per cent. of orders then placed were for tankers.
What was the result? The result was that new shipyards were started and old ones were expanded. Countries that did not have a shipyard were encouraged to build one; they probably already had the wish to do so, but this stimulated them. Today we have heard of South Korea, but Spain, Brazil, Mexico and so on were among them. Japan itself expanded enormously. Then what happened? The great OPEC decision was made and in 1975 the bubble burst, with catastrophic effects on the shipbuilding industry.
I have mentioned all these different facts because it is not only the tanker situation that has created the trouble. If and when, in time to come, those over-capacities, over-provision and so on are resolved, there will still be the cumulative effect of these other factors which I mentioned a moment ago. Figures for the tanker effect have been quoted and I do not want to repeat them too much; 32 per cent. of the present tanker fleet is surplus. However, I should like to mention one further figure which has not been given this afternoon and which I think is significant of the position as it was. I must apologise to your Lordships

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because I mentioned this figure two years ago during the Second Reading debate on the Aircraft and Shipbuilding Industry Bill. However, I think that it very significant indeed that even at that time, in September 1976, no less than 250 orders for tankers, or 55 million gross registered tons, had been cancelled. That is an astonishing figure when one compares it with the situation as it exists today.
One has only to think what all that means in relation to the position in the shipyards to appreciate what a desperate situation we are in. How timely it is that something is being said about it now, that it is being discussed both in Europe and in your Lordships' House; but how inscrutable the problem is. Of course, one's natural feeling is to say "Oh well, the cycle will turn; there will be an upsurge in trade; more ships will be brought back into service; more profits will be made so that new ships can be built to replace old ones and so the order books will be filled".
But, of course, that would be a complete over-simplification of a very complex matter, because there are these underlying structural effects in the shipbuilding industry, which I mentioned earlier. I do not think that this has been mentioned today, but increasing inroads are being made by the Soviet activities in the maritime world, which are enormous. Therefore, even with the 4 per cent. economic growth, which is mentioned in the report and which has been mentioned today as probably being far too optimistic, we cone down to a possible production needed of no more than 12 million compensated gross registered tons compared with a figure of 19·5 million in 1975.
We come to this very difficult problem which every noble Lord has mentioned this afternoon: how are we going to divide that up? The question is: how are we to deal with countries outside the OECD when they are bent on retaining all the expansion they already have and probably increasing it? Let me quote one remark that was mentioned to me only two days ago when I was discussing the question of prices quoted for ships from the great shipyard, the Hyundai shipyard, in South Korea. I was told—and I received this second-hand—that somebody there had said, "We don't
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bother any more to cost our ships when we tender. All we do is to find out the market price, then remove a satisfactory percentage from that so as to be certain of getting the order." If that is the situation, and I do not think that it is exaggerated, what hope is there of coming to an agreement limiting the different countries round the world? I find it difficult to see how much further arrangement we can even hope to get from Japan.
Of course, it is clear that the Commission recognise this only too well, But, as I read their communiction, they recognise that the squeeze must be more than ever on Community shipyards, and so—and I need not go into the details because everyone has said this —they come down to a figure of 2·4 million compensated gross registered tons which, to my mind, can only be regarded almost as a residue figure, which is a most unsatisfactory way of arriving at any figure at all. It relates to a 46 per cent. reduction between 1975 and 1980, which is quite disproportionate and unfair to the Community compared with the rest of the world.
One noble Lord has already mentioned that the British shipbuilding industry between, say, 1950 and 1975 has cut its employment by 45 per cent. while retaining the output of roughly 1·2 million tonnes. I cannot help commenting on that, bearing in mind the lengthy debate on productivity that we held in your Lordships' House only a week ago today. To some extent, of course, that drop, to be fair, must be due to the fact that the ships built more recently are far less sophisticated and need far fewer outfitting trades than the ships in the 1950s, which were much more sophisticated; more passenger liners, and so on, were needed. But, at the same time, some of that is undoubtedly due to the fact that there has been considerable technological investment in the industry and that productivity has increased. That is something that we do not want to forget, because it is a very good point.
Where does one go from here? I would entirely agree with other noble Lords who say that one of the most important things is that the Community and, if possible, the OECD, should speak with one voice: we should do our utmost to try to find, if we possibly can, some form of common maritime policy. But,

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if we are to succeed, one ingredient is absolutely essential, and that must be that we make our own shipbuilding as competitive as possible so that that one voice carries the weight in world discussions. I find it difficult to see that the question of responsibility can really lie with the Community. It must surely be more a national matter, and indeed an individual company matter.
This leads me to say a word—this may appear rather unnecessary—about what is the object of shipbuilding. The object of shipbuilding is to service the shipping industry. It is therefore terribly important that, in trying to preserve the shipbuilding industry, we do not do so, as other noble Lords have said, at the expense of the shipping industry by agreeing to what could all too easily be an unhealthy degree of subsidies, creating the cut-throat competition which has already been referred to and which, in turn, will end up reducing the number of orders that the shipping industry can give to the shipbuilders.
There was a little interchange a short time ago as to the percentage that the British yards were providing for British shipowners. I agree with noble Lords who said that it was 30 per cent., although it represented 70 per cent. to 80 per cent. of the production of British Shipbuilders. I think we are all clear about that now. But that is on the basis of 1·2 million tons production per year. In the light of the 30 per cent., and the 70 per cent. to 80 per cent., it is difficult to see how one could justify to oneself any permanent reduction of that figure. I say "permanent reduction" of that figure. On the other hand, if that is our argument, how do we justify that argument to the Community and the outside world? Again, it comes back to competitiveness, bearing in mind that, generally speaking, as the noble Viscount, Lord Simon, said, in many of our yards we have really first-class, up-to-date equipment. We have to make the best use of that that we possibly can.
That brings us to the personal matter: the inevitability of redundancies. The Government have recognised this. Reference has been made to the Shipyard Redundancy Bill, which we debated not so long ago. I think my noble friend has put
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a question to the Government on how this is getting on. It is difficult to know how to handle this, but, on the other hand, the sooner it can be handled the better it will be for the shipyards, if for no other reason than that uncertainty as to the future creates bad morale. Morale in some shipyards is undoubtedly not at all good. One knows of not very good timekeeping, and of people coming out of the yards before their time, five o'clock, or whatever it is. That shows bad morale. It is understandable, but bad morale breeds poor competitiveness.
To sum up, I agree in broad terms with the views of the Committee. I certainly agree that we must try to have one European voice; that we must aim for a Community maritime policy. I would agree with the need for some form of Standing Committee. I realise that it is a fairly controversial matter as to how it should he formed and of whom it should consist, but it is important that there should be some form of Standing Committee to monitor what is going on and to feed those who have to carry out the world discussions.
I agree about the desirability and the importance, of making use of any transitional help—the Social Fund, the Regional Fund—that one can. But, having agreed so far (and this is absolutely no criticism of my colleagues on the Committee), I must say that we have not in fact got very far. That brings me to the answer, which I have not given, to the question I asked at the outset—namely, how is it that we have got nowhere? I think the answer is that it is the nature of the beast; it is such a difficult problem that it is hard to see how we could have got further. I would only say the report will have done a good job if it helps to clarify the position, if it helps to drive home what a serious position the industry is in and if it makes us recognise that there is no quick answer; We must move step by step and hope that, with everybody trying to do their best, a solution will ultimately result.
6.31 p.m.
Lord INVERFORTH: My Lords, as a shipowner I have listened to the debate with interest, but I fear that my own morale is not very high at the moment. It is a very tricky subject, but I am grateful to the noble Lord, Lord Rhodes, for

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giving us an opportunity to air the many difficulties which are worrying us. I am not only a British shipowner but a customer of our own shipyards. Indeed, on completion of our current building programme, my company will have built since the war 84 ships, all in the United Kingdom, at a cost of some £200 million. We can say that represents a 100 per cent. British order in every way. This debate is therefore of particular interest to me, as we may wish to order further ships in the future, once the climate changes and world trade picks up.
The world's shipyards are producing ships far faster than they are receiving new orders, and in the last five years the total world order book has continually declined, so that today many countries have only a few months' work left. Japan, Sweden and Norway have responded to that situation by announcing specific plans to reduce capacity. Indeed, all OECD countries, including the United Kingdom, agreed two years ago that reductions were necessary and Her Majesty's Ministers have made no secret of that fact. I understand that many shipyard workers have already been switched from merchant to naval shipbuilding, and the Shipbuilding (Redundancy Payments) Act, which your Lordships approved two months ago, will assist a further reduction.
British shipbuilding has in fact thus cut down its merchant shipbuilding capacity, and will cut it down further, but because no figures are given to the public we are not given credit in Europe for what we are doing to implement the policy agreed with our colleagues in the EEC and OECD. Indeed, only a fortnight ago, when the EEC Council of Ministers discussed the Commission communication which we are now considering, the United Kingdom, apparently alone, opposed a common EEC position on shipbuilding and has shown little enthusiasm even for forecasts. Accordingly, the impression is given that the Government will do anything to secure new orders, even giving ships away. Such a policy must harm British shipping and delude United Kingdom shipbuilders. Accordingly, on behalf of the customers of United Kingdom shipyards, I ask the British Government to
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take this opportunity to emphasise that the British, like their colleagues abroad, are determined to discourage the artificial creation of new orders.
Last week the European Parliament was discussing the communication which is before the House today and many sensible things were said; but an old hobbyhorse raised its head again, namely, the idea that EEC shipowners should he required to build most or all of their ships in EEC yards. Those who advocate this protectionist line make a comparison with the EEC agricultural policy on imports, but the comparison is false. The consumers of the Community's agricultural products live in the Community and are captive customers. The consumers of the Community's shipping services are Malayan rubber growers, Japanese manufacturers and Australian iron-ore producers. They are not captive customers, and if we want to carry their cargoes we, as shipowners, must be competitive, and we can be that only if our ships have been built at competitive prices. I know that from personal experience; as I said, my company has always built in the EEC, indeed in the United Kingdom, but we are mainly cross-traders. We have no protected home market and we earn our living and the country's by carrying cargoes across the Pacific and Indian Oceans, for example. For 1977, my company's own fleet earned over £28 million towards the balance of payments. The Intervention Fund and the stimulus of foreign competition have enabled EEC shipyards to give us competitive prices, but once they had a monopoly those conditions would no longer apply. I hope therefore that we shall hear no more of that particular idea.
My noble friend Lord Simon asked about a report in The Times today concerning a scrap-and-build scheme being proposed by the International Maritime Industries Forum. That is not a body to which I belong and I am afraid I cannot answer his question because I have not looked fully at The Times article. Anybody looking for a solution deserves encouragement, but your Lordships should not underestimate the practical problems in devising a scheme which will produce new orders without increasing over-tonnaging or costing more than Governments are prepared to pay. If this new solution

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helps shipbuilders and shipowners, both will be delighted. Looking at many scrap-and-build schemes, it is hard to find one that is fair to everybody. When my company's current building programme is completed the average age of the fleet will be eight years; it seems rather a shame to start scrapping ships of that age. On the other hand, companies with very old ships may be delighted.
The report of the Select Committee is most valuable and we must be grateful to the noble Lords who produced it. I only urge that we encourage others to read it and be guided by it. The Commission has also done a splendid job in educating us all to the realities, and that in itself is a valuable achievement. There is no easy solution, but I remain hopeful that gradually the EEC and its OECD partners will adjust to the new world, and I hope that when the time comes there will be a viable British shipbuilding industry to build ships for my company, and the more the better.
Baroness WARD of NORTH TYNESIDE: My Lords, may I ask the noble Lord, being a shipowner, to make an additional statement! He said his firm had always ordered ships in United Kingdom yards. Would he add that British shipowners have over the years ordered about 70 per cent. of their tonnage in United Kingdom shipyards and a higher figure in EEC yards as a whole? It is vital in this debate that that point is emphasised. Having listened with great interest to his helpful speech, I should be grateful if he would confirm what the British shipping people have told me in a note.
Lord INVERFORTH: I believe that is absolutely true, my Lords. We have ourselves always built here, not just out of sentiment but because we have always had an extremely good bargain from British shipyards; Harland and Wolff, Swan Hunters, as it was in the old days, and Doxford, now Sunderland Shipbuilders. I believe that much has had to do with the type of tonnage; we are using a quite sophisticated cargo liner which has always been built extremely well here. Perhaps if we had been building the big bulkers or tankers we might have gone to Japan and got a better bargain there. Certainly the tonnage
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influences the situation; and of course delivery dates are important. We have been lucky and have not had many vessels delivered late, though I know other shipowners have had a ghastly experience in that respect. We, as an industry, have supported the United Kingdom and the EEC countries because they build fine ships. We have had many container ships from them and they have concentrated on that field. I should have thought therefore that as owners we have a good record for supporting both at home and on the Continent, in the EEC.
Lord CAMPBELL of CROY: My Lords, before the noble Lord sits down, and in no way detracting from what he said, I should perhaps record that the way in which my noble friend Lady Ward of North Tyneside read out that piece was to make the same inadvertent mistake that I made in my speech where I emphasised the 70 per cent. to 80 per cent. it is 70 per cent. to 80 per cent. of the United Kingdom shipbuilding production which the British shipowners have used, but it has been 30 per cent. of their ship orders. As I was the first to make that mistake and my noble friend Lord Rochdale and the noble Lord, Lord Bruce of Donington, redressed it, I should like for the record again to put it right.
Viscount SIMON: My Lords, as this matter has been raised, I wonder whether could put a point because I still find the figures almost impossible to understand. The lower figure of 70 per cent. of the output of the British yards, which is 1·2 million a year, comes to 0·84 million a year. We are told that that is 30 per cent. of the British requirement. That makes the British tonnage requirement 2·8 million a year, and yet at another point we are told that 1·2 million is sufficient to look after the British tonnage requirement. Is this because in future British tonnage is going to be less?
6.42 p.m.
The Earl of BESSBOROUGH: My Lords, I had not intended to speak in this debate but as my noble friend Lord Campbell of Croy referred to me and to the fact that I was the draftsman of the Opinion of the Budget Committee of the European Parliament, and in the presence

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too of the noble Lord, Lord Bruce of Donington, who is one of the great experts on the Community budget, I thought perhaps I should just speak very briefly. I do not intend to repeat what I said at some length during a three and a half hour debate in the European Parliament last week about the budgetary aspects, but there are just a few points which I should raise.
Before raising them very briefly I should like, with others, to congratulate the noble Lord, Lord Rhodes, and the noble Lord, Lord Trevelyan, on having produced this report and I should immediately, in parenthesis, take this opportunity of saying that the reports of your Lordships' Select Committee are the best reports produced by any House of Parliament in the whole of the Community, and the demand for them is quite astonishing. All my colleagues in the European Parliament come to me when a report has come out; it is hardly off the press before they say, "Have you got the Lords Select Committee report"—on shipbuilding or aerospace, or whatever it may be—and our Select Committee is to be congratulated in that way on doing a remarkable job.
As I say, I am not going to repeat all the arguments which I put forward in the European Parliament about the specific Commission proposals. I very much agree with the opening report of Mr. John Prescott for the Economic and Monetary Affairs Committee. It was a very thorough piece of work. I may say also that I did a thorough piece of work in so far as I wrote to, I think no fewer than 40 different shipbuilding firms or groups of firms in the Community, and as a result we have this 100-page report—which, I regret to say, probably most noble Lords have not actually read although I think it is worth reading—with its annexes of the replies from all the different firms. Both Mr. Prescott and I worked very hard on this subject and both committees met three or four times to discuss it.
One of the main points I want to make is that nowhere is it stated in the Commission proposals what the actual charge would be on the Community annual budget as such. Certain existing financing instruments, which the noble Lord, Lord Bruce of Donington, knows well, will be called upon, such as the Regional
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Fund and the Social Fund, as well as Article 375 which was created during the last budgetary procedure and which is designed to provide some economic aid to industries in distress. However, the amounts available in these different budgetary items are limited—usually as a result of a fairly restrictive attitude by the Council of Ministers—and it is difficult to see how they could be expanded significantly to cope with the extra task which arises specifically from these Commission proposals.
Another element—and I am just glossing the various points which I made in Luxembourg—which particularly concerned me was that the Commission had not troubled to take into account the differing situations within our Member States. The crisis in shipbuilding, as all noble Lords who have spoken in this debate know better than I do, is not an entirely new phenomenon. In the United Kingdom we have just passed, as various noble Lords have said, a Shipbuilding (Redundancy Payments) Act which affects very closely the relevance of the Commission's proposals and which does not seem to have been taken into account by the Commission. Moreover, the Government set up, as we have also heard, a Shipbuilding Intervention Fund. Do we also need a Community Intervention Fund? Again, that fund was mentioned by the Commission in its communication. I fear therefore, as I said in Luxembourg, that the Commission's policy document is largely overtaken by events.
The problems facing the industry are clearly of a social and regional character as well as of an economic one. The question is really that which the noble Viscount, Lord Rochdale, raised just now. I put it like this: should the Community assume responsibility for this crisis? I ask the question not only because the noble Viscount, Lord Rochdale, raised it, but also because many members of my own Budget Committee raised it and expressed their concern, as they have before, that the Commission is too willing to take on vast responsibilities in different sectors undergoing major crises. if the Community's responsibility was accepted, and I am not covering only the shipbuilding industry, it would involve massive financial commitment far beyond the limits of the Community's own resources as at present defined.

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Finally, my Lords, I would say that there is some merit in the Commission considering this matter, and it has been, I hope, persuaded to revise its proposals, to persevere in elaborating new proposals which can come back to the committees of the European Parliament—and I trust to the Select Committee in your Lordships' House—and also be discussed again in both Parliaments in plenary. I hope that by that time we shall have had some rather harder information. Viscount Davignon, although he made a very interesting reply last Wednesday, certainly did not give us all the hard information which the Budget Committee, in particular, wanted.
6.49 p.m.
Lord BRUCE of DONINGTON: My Lords, it gives me particular pleasure to have the opportunity of following the noble Earl, Lord Bessborough, in the contribution he has just made. I had the privilege of working next door to him in the Budget Committee of the European Parliament and I was able to hear the very effective speech he delivered on this subject in the European Parliament last week.
Before proceeding to the subject matter of this debate, with which I can assure your Lordships I shall deal with the utmost brevity, I should like to pay a tribute to my noble friend Lord Rhodes for the way in which he introduced the report of the Select Committee this afternoon. I also wish to endorse the remarks of the noble Earl, Lord Bessborough, about the quality of the reports which come from the Select Committees of this House. I entirely agree with everything he has said about this. It is common knowledge in the European Parliament that the reports of the Select Committee of the House of Lords are of the highest quality, comparable with—indeed, much better than—those from many other Member States. I shall not on this occasion mention another place.
I have a particular interest in the subject. Apart from being a member of the Budget Committee of the European Parliament, I also have the honour of being the chairman of the Regional Planning and Transport Committee of the European Parliament. It so happens that
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the very regions which are the underprivileged regions in the Community, and whose interests are my Committee's special study, also contain, by coincidence, most of the shipyards that are likely to be affected by any mass redundancies, or by any small-scale redundancies, for that matter.
I should like to pass to the section of the Commission's proposals which suggests that measures should be taken to stimulate demand, for instance, by establishing more stringent environmental and safety factors. It may be that there are too many ships afloat at this time. I should also like to tell your Lordships that there are too many substandard ships afloat at this time, and they are not only a menace to the crews who sail many of them, but are also a menace in terms of accidents at sea and consequent pollution.
A fortnight ago, I had the opportunity of conducting a public inquiry in Paris into the prevention of accidents at sea and the avoidance of consequential pollution, in the course of which I and my committee had the opportunity of listening to experts from shipbuilders, shipowners and oil companies, as well as to masters and crews, and to representatives from insurance and salvage interests, and from maritime regions of the Community, as well as from the Commission itself. Some quite alarming evidence began to emerge. It appears that as much as 10 per cent. of the tonnage afloat is substandard, anyway, and that, if steps were taken to ensure that the standards set by international conventions were kept, about 10 per cent. would have to be scrapped, and a very significant number would have to be replaced in order to deal with the current trend.
Why is this not done? Why are there so many substandard ships sailing the seas at present? There is a very simple reason: from time to time international conventions are held for the purpose of establishing standards of ship design and construction, facilities for repair and inspections, and the training of ships' crews, as well as a whole series of other matters. Many States throughout the world have signed these conventions, and everybody assumes that everything will be all right. But that is not so, because until the conventions are ratified by States—and some of them require 100 per cent. ratification

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—they do not come into force. So at present we have a number of very admirable conventions drawn up by IMCO (the Inter-Governmental Maritime Consultative Organisation, an agency of UNO) which have laid down standards to which large numbers of countries have assented, and which, if they were applied, and applied strictly, would result in an immediate increase in the demand for shipping. This is what the Commission mean when they say that measures should be taken to stimulate demand, for instance, by establishing more stringent environmental and safety standards.
Some of the evidence we heard in Paris was blood-curdling: for instance, there are a number of ships afloat in the hope that they may sink, so that the insurance money on them may be collected. I can produce the evidence to the noble Lords, if required. Remarkably enough, in this field the United Kingdom is one of the States in Europe that has ratified the most conventions. We in the United Kingdom are very often accused of lagging behind the rest of Europe in many respects in terms of being good Community Members. I must tell your Lordships that the United Kingdom is top of the league in ratifying the conventions and that there are many other States belonging to the Community which, in varying stages come well below, down to the Republic of Ireland which has so far ratified only one. Until these conventions are ratified, they cannot be enforced, and if they cannot be enforced, substandard ships will continue to float across the oceans, and in many cases will be a menace to other shipping and certainly a menace to the coasts close to which they sail.
The Commission's proposals in Document 161/78 to the Council, following the "Amoco Cadiz" disaster, drafted a Directive for issue by the Council, requiring the Member States of the Community to ratify forthwith all the conventions which they had not yet signed. This does not apply to the United Kingdom; the United Kingdom has ratified them all. I noted with regret that, for some reason or another, these proposals were vetoed at the last Council of Ministers by one or two Member States —not the United Kingdom—as a result of which the proposals have been watered down, and all the Council did at its last
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meeting was to take note of the Commission's requirements and to recommend them to other Members.
This lies at the heart of the problem. Not for one moment am I pretending that the increase in demand which would result from the strict enforcement of standards would eliminate the problem with which we are confronted; but I am saying that, when we are talking about redundancies in shipyards and reductions in capacity, we should remember that human individuals are involved in this industry and that they have spent their lives contributing their skills to it. Therefore, if we can do anything to contribute to a minimisation of the redundancy and the cut-backs that the Commission thinks are necessary, surely we should do so. I invite Her Majesty's Government to use all possible pressure at Council of Minister level to see that the other recalcitrant Member States of the Community put their money where their mouths originally were when they signed the conventions and in fact ratify them without any further delay.
I pass to a further point which arises from the question which I addressed to the noble Lord, Lord Campbell of Croy, (which he was kind enough to correct), and in which I pointed out, as the Select Committee did, that only 30 per cent. of the requirements of British shipowners came from British yards. I am very happy to congratulate the noble Lord, Lord Inverforth, upon the 100 per cent. record of his company. I do not know what further words of felicitation I can offer him in the face of such a record, but quite clearly this does not apply all the way through the shipbuilding industry in the United Kingdom. There are very good reasons why. The noble Lord, Lord Campbell of Croy, referred in the course of his speech to competition from Japan; he also referred to South Korea and Brazil. Three or four weeks ago the Economist pointed out, with great succinctness that wage levels in South Korea are one eighth of those in the United Kingdom, and the wages in Brazil, similarly. When this is translated into European terms as distinct from British terms—because British wage levels are lower than those in the remainder of the EEC—one can see immediately what a competitive advantage countries like South Korea and Brazil have.

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My Lords, we have to address ourselves to this question: How is it that competition can be offered from that quarter, where there are these low wage levels? The answer, my Lords—and the sooner we in the United Kingdom face it, the better —is that at a time when United Kingdom industry needs further investment from the capital resources of those that own the capital here, it is United Kingdom capital that is very largely responsible for the financing of South Korean shipyards and also shipyards in Brazil. I am not suggesting that Her Majesty's Government can do anything about this, but it is a fact that should be known in case, sometimes, shipowners are tempted or are prone—I do not mean the noble Lord, Lord Inverforth—to shed crocodile tears about what is happening within the British shipbuilding industry; because this is in fact what happens. In the way we organise our economy and our finance in Britain, financed capital itself is partly responsible for the competition from South Korea and Brazil which is endangering the continuance, not only of British shipyards but also of shipyards in Brest and other ports in other countries in Europe.
I repeat: there is nothing that Her Majesty's Government can do about this under existing legislation, but it might be a matter that Her Majesty's Government may see fit to consider when adopting certain taxation policies, certain intervention policies and certain subsidy policies in aid of British industry; and it might be reasonable and wise for the Community as a whole, if there are going to be aids to shipowners in the Community and in the United Kingdom, to stipulate that they should place their shipping orders in the Community and, to some extent, also in the United Kingdom. This does not seem to me to be an unreasonable stipulation.
My Lords, that is all I have to say on that subject. I return briefly to my original theme, which I hope will be taken to heart by Her Majesty's Government. I hope that, within the Community, in which the noble Earl, Lord Bessborough, and myself have some joint interest, Her Majesty's Government, in the Council of Ministers, will take the greatest possible energetic steps, first of all to ensure that the remainder of our Community colleagues
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follow Britain's example and ratify these international conventions, and then to use their best endeavours within the Community to ensure that when the Community have acted as one in this matter they should then, as a Community, with all the political and economic power possessed by that Community, bring pressure to bear upon the remainder of the recalcitrant nations, so that the conventions initiated and organised by IMCO can be brought into effect, the demand stimulated and accidents at sea and consequent pollution avoided.
7.4 p.m.
Lord WINTERBOTTOM: My Lords, my first duty is to congratulate the Select Committee on its excellent report, and, in particular, to thank my noble friend Lord Rhodes for introducing it. He said that the Committee had done its work painstakingly. Her Majesty's Government agree with that view, and find that there is really very little in the report with which the Government would wish to disagree. But perhaps before I deal with the report itself I could say a few words of a general kind about the Government's view of the need for a Community policy, and later in my speech I shall endeavour to answer certain questions put to me by noble Lords, provided they will not begrudge me the time for doing so.
The Government naturally support the principle of a Community policy for shipbuilding. We have always made this plain, and we welcome the opportunity presented by the Committee's report, both to learn the views of the House and to explain to the House our own views on this important but often difficult and controversial subject. I have said that we support the idea of a Community shipbuilding policy. It is worth pointing out that the communication from the Commission which is before us today is not the first such document. About two years ago the Commission produced another communication on shipbuilding which suggested the need for policies which would ensure that the Community did not have to bear more than its fair share of the burden which would result from the huge drop in world output. We, as a nation, waited in vain for such a policy; and in the end we had to lead the way by introducing our own domestic

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policy, the Shipbuilding Intervention Fund, without which the United Kingdom shipbuilding industry would have collapsed virtually overnight. That fund has helped in some measure to reduce the gross imbalance in the distribution of new orders between ourselves and Japan, on the one hand, and ourselves and certain non-OECD competitors, on the other.
Most other Community Member States have followed suit in one way or another and to a greater or lesser degree; and in due course the Commission itself recognised the need for a co-ordinated policy of this kind and introduced the Fourth Directive on aids to shipbuilding, which blessed the United Kingdom, Dutch and French schemes retrospectively, so to speak. But this was not a Community shipbuilding policy in the real sense. It was simply a recognition by the Commission's Competition Directorate that, in the absence of any common Community policy to ensure that we received a reasonable level of orders, Member States would have to plough their own furrows; and, that being so, it was essential, not only to give the necessary general dispensation from the Treaty for the introduction of production aids, but also to have some co-ordinating mechanism and some ground rules so as to ensure that these aid schemes genuinely brought new orders to the Community and not simply redistributed the few orders we already had inside the Community.
So we still had to await Commission proposals for a genuine common policy; and I have to say that when they came, in the form of the document which is the subject of your Lordships' Select Committee's report, they came as something of a disappointment. This was not so much because we disagreed with everything that the Commission suggested—far from it, as your Lordships will see—but because in our view the emphasis was put wholly on the wrong aspect. Noble Lords will remember the publicity which attended the publication of the Commission's communication. It concentrated almost exclusively on the need for drastic reductions in the size of the industry. The Commission even gave the precise level to which that reduction should go: 2·4 million compensated gross registered tons —not 2·5 million or 2 million or 3 million, but 2·4 million. I think the Commission
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now accepts that this was not a reasonable suggestion to make. The reasons are fairly obvious. The forecast on which it is based is two years out of date; it is also based on the lowest point of the demand cycle in a notoriously cyclical industry; it is a defeatist kind of policy; and it takes no account of social, industrial and political realities. But if we set this point aside and examine the document afresh, we find that there is not much between us. What kind of a Community policy would this Government like to see? I think we have to look only at our own policies for the answer to that question, for the fact is, my Lords, that we have anticipated just about every proposal the Commission has made.
Let us begin with restructuring. No one disputes that the British shipbuilding industry was not well placed to compete effectively against modern competition from the Far East and West. The industry needed reorganising and reinvigorating; and public ownership, we believe, is the means by which that can best be achieved. Our objective, and that of British Shipbuilders, is to make our industry efficient and enthusiastic enough to compete with anyone on level terms. Much work has already been accomplished to that end, as noble Lords have already pointed out, and much more is being and will be done. This is the first step towards the fundamental objective of a Community shipbuilding policy.
Restructuring takes time, however; and in the meantime competition for orders remains fierce, and it is our firm belief that no shipbuilder is today selling ships at an economic price. Our second step had to be to ensure the survival of our industry under those conditions, while the process of reorganisation and restructuring went on. That is why the Government introduced the Intervention Fund for shipbuilding, to slow down as best we could the dramatic drop in our flow of orders, which was out of all proportion to the average drop in world demand. The success of that policy last year is clear.
Our third step was to introduce the Shipbuilding (Redundancy Payments) Act. Let me say at once that the Government have never denied that there will have to be some contraction of the shipbuilding industry in this country. We cannot

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avoid it. World demand this year may well be as low as 7 million compensated gross registered tons; that is probably about a third of real world capacity. For nearly four years, orders have been running at about two-thirds of world capacity. No one, not even the Japanese, can escape the consequences of a slump of that magnitude. But here is where our approach differs from that of the Commission. Our policy is to keep that contraction to the minimum compatible with the order situation; not to set arbitrary targets which become self-fulfilling prophecies.
A noble Lord: Hear, hear!
Lord WINTERBOTTOM: My Lords, I am grateful to my noble friend. I think that this is absolutely fundamental. We are not taking a negative and self-defeatist attitude towards the problem. Shipbuilding, in our view, is not an industry which lends itself to such treatment; any policy needs to be a flexible one, and fully responsive to changes in the situation. It has to be a humane one, and it has to be industrially realistic. Of course, if there are not enough orders to go round, people will be without work, and it is right that the orders we win should go to the most competitive yards. But it would be neither sensible, practical nor humane to say that we shall shut down so much capacity here this year, so much there next year and so on; and if this is not practicable in a national context, how much less practicable is it in a Community context?
My Lords, the Commission also suggests that shipyards should diversify into other activities, and that new industries should be created to absorb surplus shipbuilding labour in the shipbuilding areas. Already, British Shipbuilders has reduced its employment in merchant shipbuilding, the sector affected by the crisis, by some 22 per cent, as compared with 1974. This has mostly been the result of an extension of the Government's warship building programme, but British Shipbuilders are also exploring other possibilities.
The noble Lord, Lord Campbell of Croy, raised the question of building warships as a speculative venture. At the moment, no speculative warships are planned or being built; but British Shipbuilders are, naturally, looking hard
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for new warship orders and, if they think that advance building would assist sales, they would, no doubt, want to consult the Government. Obviously, at this stage, I cannot say what the Government's attitude would be; but this is not a proposal that is ruled out. The Government have also introduced a programme of advanced factory building in shipbuilding areas. And provision for retraining workers for other employment already exists, as noble Lords have shown they are aware.
Noble Lords may ask, when we have already anticipated so much of what the Commission is seeking to achieve, what need do we have for a common Community policy? The Select Committee, we believe, has itself answered that question in paragraphs 38 and 39 of its report; and the Government agree that it is important that the Community should act as one in its efforts to meet the consequences of the shipbuilding crisis. Perhaps the Community's policy need not be so formal as the Commission suggests, but it is important that we should have common aims, and that our individual efforts to achieve those aims should be properly co-ordinated, and, equally importantly, that each Member State's national policies should be properly understood and appreciated by fellow Community Members.
There is, therefore, much value, in terms of co-operation, understanding and cross-fertilisation of ideas, in the Community getting together and jointly formulating objectives for shipbuilding, and deciding on the means by which they are to be achieved. Those means may differ from one Member State to another, for a variety of very good reasons; and the overall objectives will themselves have to take account of the differing social, political, economic and industrial factors in individual Member States, all of which will also have to be explained and understood by everyone; and in our case, as the Committee has noted, there are important strategic factors to be taken into account in determining any shipbuilding policy. That, again, was a point made by the noble Lord, Lord Campbell of Croy.
Might I now turn to the report itself? First, may I say that in addition to views expressed by noble Lords, it is probably the best public work of reference on the

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Commission's proposals that exists, and it ought to be compulsory reading for anyone who wants some background not only on Community shipbuilding policy, but also on the current shipbuilding slump. And there is not a great deal that I need comment on or add to. I should like to refer, first, to paragraph 18, however. It is here suggested that the Commission's figure of 2·4 million cgrt for demand that could be met by the Community in 1980 may be an overestimate. I do not especially want to disagree with that statement, but I think it needs to be qualified and explained a little. Here, perhaps I may have to call on the help of my more experienced colleagues in the world of the European Budget.
First, in borrowing this figure from a paper produced by the Association of Western European Shipbuilders, the Commission appear to have misrepresented its origin. They say in their Communication, in paragraph 2 of Part A in Section 1,
"The Association of Western European Shipbuilders' experts forecast that Community yards will deliver 2·4 million cgrt in 1980, compared with 4·4 million in 1975".
However, it is my understanding that this is not what the AWES experts said at all. I believe that they said that if world demand in 1980 was 11·8 million tons, and if the non-OECD countries captured 4 million tons of that total, then the rest ought to be divided equally: 3·9 million tons to Japan and 3·9 million to the other OECD members. The Community's proportionate share of that 3·9 million would have been 2·4 million tons. But, in fact, the AWES experts then went on to argue that if the Japanese industry insisted—as it did two years ago—on keeping 50 per cent. of the total world market, then the other OECD members' orders would drop to 1·5 million tons rather than 3·9 million tons. This is a complex argument which will probably read better than it is spoken. I think that criticism of that 2·4 million figure is valid and should be studied.
So you will see, my Lords, that in that sense, certainly, the 2·4 million cgrt figure might be described as over-optimistic in the terms used by the Commission. I have mentioned the origins of this figure because I think it necessary to be aware of its fallibility, and to understand that many
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factors will affect what we and other Community States will be producing in 1980 onwards.
Perhaps it might also be relevant for me to mention here that there have just been published, in a newspaper in Japan, some proposals for restructuring the Japanese shipbuilding industry. They purport to be the draft proposals being considered by the Japanese Shipping and Shipbuilding Rationalisation Council before submission to their Minister of Transport later this month. Although there has been no official confirmation, there has been no denial either, and there seems little reason to doubt that these proposals are essentially what the Japanese have in mind.
They appear to involve an overall reduction in capacity of about 35 per cent. by the middle of next year; but what is significant, perhaps, is that they are said to be based on an expected level of a demand for new orders from Japan of 6·5 million cgrt in 1985, which is 65 per cent. higher than the AWES suggested figure for Japanese output in 1980. So you will see, my Lords, that there are far too many qualifications attendant upon any figure to make any kind of forecasting a worthwhile exercise. Everything depends initially on the direction taken by the world economy, which is itself influenced by a wide variety of unpredictable factors. Much depends on the view of the future taken collectively by the world's shipowners; at present, they appear to be in a relatively gloomy mood. Much depends on the extent to which our competitors continue their uneconomic activities. Much depends on what success British Shipbuilders have in making the industry more competitive. And much depends on the protectionist attitude of other countries. Forecasts there are, and always will be; and very helpful they can be on occasion. But, under these circumstances, I do not think we want to base far-reaching and perhaps irreversible decisions on such uncertain prophecies.
In paragraphs 35 to 37, the Select Committee has referred to the European Council's Directive in aid to shipbuilding. I think it might be helpful if I expanded a little on the link between the Directive and the Communication. The Commission's Communication makes proposals for an industrial policy in a particular

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sector; it requires the agreement of the Council before any of its proposals can be implemented. Until the Council has reached a formal decision on any aspect, it remains as a set of proposals only, and is without any effect.
The Directive, on the other hand, is in the nature of a statutory instrument. It too requires the approval of the Council but it is of a different character to the Communication altogether. It is concerned not with shipbuilding policy, but with competition, and it is important to bear that in mind.
In general, the Treaty does not permit state production aids which distort competition; but where there is a crisis, they may become essential for a time, and it is so in shipbuilding. The Directive therefore sets out the kind of conditions under which certain State aids may be regarded as still being compatible with the Rome Treaty, and in that sense it is a permissive document. The Directive naturally says that one of the conditions is that such aids must be consistent with any agreed Community policy in the shipbuilding sector; but we do not yet have one.
The Committee suggests that the Directive can be seen as an attempt to coordinate national reactions to the shipbuilding crisis, to co-ordinate the policies of Member States to minimise discriminatory measures and avoid competitive subsidy. I think it is important to make clear that these principles apply inside the EEC; what the Directive aims to do is prevent distortion of internal community competition, while permitting Member States to deploy subsidies to preserve a reasonable level of orders. And it cannot take any part in the development of a Community policy until that policy has been agreed. It is perhaps at that point where my noble friend's remarks about substandard shipping might have application. There might be a Community policy on that.
It is important to make this clear because there have been suggestions that the Directive is the means by which the Commission intends to enforce the contraction proposals set out in the communication. Nothing could be further from the truth. The communication, as I have said, requires the approval of Council
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before it has any force, and the Directive's references to a Common community shipbuilding policy thus have no effect for the present.
I come finally to the Committee's opinion. They suggest, in paragraph 38, that the principal objective put forward in the Communication—that is, to create a competitive European shipbuilding industry which can meet a significant proportion of the Community's large requirement for ships—is an objective which will be widely accepted. That is so, my Lords; all Member States accept that objective.
The Committee has also noted, again correctly, that national policies can still continue within the framework of a Community policy. That is also what the Government should like to see. While the disparities of approach between Member States, and the differing factors to be taken into account make a wholly uniform policy very difficult to achieve, we believe that there should be room for every Member State's special requirements within a Community policy. The Community, moreover, needs common objectives in this difficult sector in order to be able to pursue a well-reasoned and effective international policy in the OECD, where it is equally essential for there to be agreement on common aims, and on the avoidance of "beggar-my-neighbour" policies. Perhaps, my Lords, it might be a convenient moment to say that this is an area where the proposals of the noble Viscount, Lord Simons, about "scrap and build" and the filling of segregated ballast tanks, and the proposals of my noble friend, should receive consideration.
The Committee is also right to note that the aims of British Shipbuilders to survive the slump and to become competitive are not incompatible with negotiations through the Community. I would go further than that; I would say that British Shipbuilders' objectives are wholly consistent with the Community's objectives, and will be an important factor in their achievement.
I have already remarked that the Government has accepted the inevitability of some contraction in the industry, and has made provision for it in the form of the Shipbuilding (Redundancy Payments) Act 1978, the schemes under which were laid before the House last week. But in

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their discussion of this question, the Committee have stated that the attempt to sustain a higher output or greater capacity than the market will bear can only lead to the continuance of aids or protective measures for a considerable period of time, which would be incompatible with the fourth Directive. That may be so, my Lords, but the fact of the matter is that the world cannot sustain a higher output or higher capacity than the market requires; the world will order just so many ships, according to its needs; and the real question to be resolved is: Who is going to build them?
The Community is agreed that it must have the capability of satisfying at least a considerable proportion of its own very considerable requirements, and if the Council decides that this is its policy, then the Commission must, of course, take this into account in administering the Directive, even if, for a time, that policy requires the continuance of aids. I think the noble Lord, Lord Campbell of Croy, asked for some wider information on this point. He asked me about the approval of the United Kingdom Intervention Fund for 1978–79, if I understood him correctly.
Lord CAMPBELL of CROY: My Lords, perhaps I may remind the noble Lord. I asked whether he could tell us any more about the redundancy schemes, but I realise that he may not be able to do so at three or four hours' notice. Secondly, on the point to which he has just referred, I recorded that the Government had announced limits for this year and the previous year for the Intervention Fund, but it was reported in the Press—notably, today in The Times—that the Government were seeking approval of the Commission for yet some other subsidy scheme. I asked—if it was not confidential—whether he could tell us what the scheme was.
Lord WINTERBOTTOM: My Lords, I believe that I can help on this matter. It is the case that we are in discussion with the Commission about a second tranche of Intervention Fund monies. Any delay in arriving at agreement is nothing to do with this Commission communication to the Council which, as I explained, has no force in the context of the Directive.
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I cannot give any details of the Government's proposals while they are still having these discussions. But the noble Lord is correct, discussions are taking place. As regards shipbuilding redundancy schemes, schemes for Great Britain and Northern Ireland were laid before both Houses on 6th July and will be debated before the Summer adjournment. That might be a convenient point at which to probe further.
I now come to the point at which I have to express rather more disagreement with the Select Committee. But, first, let me say that I was very glad to note their criticism of the Commission's unfortunate emphasis on selecting its so-called quantitative indicator as a target for capacity reduction. This was indeed a major error by the Commission, and one which I think they now recognise. Where we disagree with the Select Committee is in suggesting that we should substitute an order of reduction in capacity for the precise figure put forward by the Commission.
With respect, my Lords, there is very little difference between that and what the Commission has suggested. For what is an order of reduction? It means a quantification of some kind, presumably in percentage terms, and to say that we shall reduce capacity by 45 per cent. is the same, for all practical purposes, as saying that we shall reduce to 2·4 million cgrt. I think I have said enough in my earlier remarks to show that this is not the correct approach in all the circumstances.
The Committee goes on to suggest that the Community will have to face the problem of apportioning capacity between Member States. It says that would be a difficult task; I say that it would be impossible and that it would in any case take so long to agree that we should be in the middle of the next boom before any agreement was reached, by which time such a policy would no longer be necessary, of course.
No, my Lords, let us be practical. We know that we shall be forced to lose some capacity because of this disastrous world slump; but let is not give it away unnecessarily, and especially let us not give it away on the basis of such uncertain forecasts as those we have seen. We urge the Community to adopt the United

1403
Kingdom approach; to accept that some contraction will be forced upon us, but to plan to meet it in a flexible and humane way; to give our industry the opportunity to become competitive; to take advantage of the return to normal market conditions and to fulfil the fundamental objective of a Community shipbuilding policy which the Committee, the Government and all other Member States support.
Lastly, I should like to refer to the Select Committee's comment on the proposal to establish an advisory committee of senior officials from Member States. In fact, if that is all the Coin-mission wished to have, it could be said that such machinery already existed. But in fact, as is clear from Annex III to the Communication, the Commission sought a standing body which would "implement and co-ordinate common objectives" in this sector. That goes considerably further than merely supplementing existing machinery with an advisory committee to discuss community shipbuilding policy.
In our view, and in the view of most Member States, it would not have been appropriate to establish a committee on the lines originally proposed by the Commission until there was some agreement on the lines of a Community policy—at which stage we would wish to see whether there would, in fact, be any role for a committee in its implementation. As to the question of an advisory committee, I have already noted that such machinery already exists; indeed before formally submitting their communication of two years ago, the Commission organised a series of consultative meetings with shipbuilding experts from Member States which at least ensured that they got off on the right foot, even if the proposals did not in the end meet with unanimous approval.
Baroness WARD of NORTH TYNESIDE: My Lords, I am sorry to interrupt the noble Lord but, for somebody like me who does not know these things, could he perhaps let us know the names of the members of the Committee?
Lord WINTERBOTTOM: My Lords, I will find out and let the noble Baroness know. I cannot at this moment give names because I do not know them. As to the Committee's point that a
1404
Committee might be useful for developing a common position for external negotiations, as the Committee has itself noted in paragraph 33 of its report, the Community has had a common negotiating position on shipbuilding in the OECD since 1976, and has had some success. This policy is developed by a group of experts from Member States in a special series of co-ordination meetings chaired by the Presidency of the day.
I hope, my Lords, that I have made the Government's position clear, though at some inordinate length. We welcome the Commission's communication, even though we are disappointed by its approach and emphasis. We welcome the signs that the Commission wants to consult Member States on a regular basis about the development of a Community shipbuilding policy. We, like the Committee, recognise that the Commission's communication is merely a beginning, or a framework, and that as the Commission itself has said, there is still a good deal more to come by way of detailed proposals on several aspects. We believe that this country is already well embarked on the kind of policy that the Community as a whole should pursue, and we shall press hard, in the discussions, for a Community policy on these lines, and for common measures which will be supplementary or complementary to our national policies,—
Viscount SIMON: My Lords, before the noble Lord sits down, may I ask him to go back for a moment to the very interesting argument he advanced about having a flexible policy and eschewing any quantitative figures? Surely one of the most essential things we have to try to do if we possibly can is to get some agreement with the Japanese to reduce their capacity. Is there any hope of getting such an agreement with the Japanese if we are going to say that we are going to have whatever capacity we think we need?
Lord WINTERBOTTOM: My Lords, that is a very good point and it should be answered, but I was speaking in the main on the role of Britain within the EEC. Presumably if we can get an EEC policy then the negotiations with the Japanese will be possible; but, while the Community as yet has no policy,

1405
we must do the best we can for our own industry. That is, I think, the view of Her Majesty's Government. Despite the gloom which generally pervades, shipbuilding does have a future within the Community and it is up to the Community as a whole to see that that future is not jeopardised by damaging short-term market distortions caused by the slump, while at the same time both pursuing its internal policies and making its contribution to international understanding and consensus through the OECD. I hope that the noble Lord who introduced this debate has received at least some form of answer to the points that he raised.
7.36 p.m.
Lord RHODES: My Lords, we are very grateful for that answer. I thought we had made a very clear statement, and I was surprised that the 80 per cent. and the 30 per cent. got so muddled. I think if those figures had been read properly they would have been clear. The report says:
"up to 80 per cent. of the industry's annual merchant output is sold to British shipowners, representing about 30 per cent. of their total requirement. Thus the United Kingdom remains a net importer of ships".
I do not know how we could have made it more obvious than that.
With regard to the 2·4 and the difficulties with the Associated Western European Shipbuilders that the Minister seemed to be in difficulties about, may I explain very briefly—I shall not keep the House long —that the idea was that Japan should have four, that Europe as a whole should have four and that the remainder of world shipbuilders should have the other four. I made it clear that one of the four assumptions that were made to arrive at the figure of 2·4 was that Europe and the EEC would work on the basis of 60:40: the 2·4 and 4 is equivalent to a ratio of 60:40.
I should like to make encouraging noises about the naval shipbuilding and the remarks that have been made on the quality of our report. We welcome, too, everybody who has spoken in this debate, and particularly those representatives of this Parliament who go to Brussels. It is heartening to know that our reports have enjoyed much popularity in Europe. The Minister referred to co-ordination of aid and I should like to remind him, so that he
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can take the information, chew over, of the differences in aid. Ours really is a dead weight on productivity, and if he will just have a look at the way in which our aid has been administered he will find that it discourages productivity rather than encourages it, as the Belgian system does.
I think we ought to send a message to the Commission to pursue what it has been doing in the way of its good work. The possibility is that the noble Lord. Lord Trevelyan, would invite Viscount Davignon to come to this country, as he has accepted an invitation to go to the Paris Economic Commission. It would be a very good thing, as well as being informative, not only for the Committee but for Parliament as a whole.
On Question, Motion agreed to.

MILK COLLECTION
7.40 p.m.
Lord DAVIES of LEEK Lord DAVIES of LEEK rose to ask Her Majesty's Government, in view of the statement by the Milk Marketing Board that milk churn collection will cease on 31st July 1979 and be replaced by road tanker collection from refrigerated farm vats, what plans are envisaged to help farmers with small herds. The noble Lord said: My Lords, I have listened with fascination to every speech in the shipbuilding debate, which was of paramount importance to Britain's industrial and international situation. But, funnily enough, British agriculture is one of the greatest savers to our balance of payments and, whatever we may think about industry, agriculture is pretty well the greatest employer of labour. The saving on imports to the British taxpayer is immense. At this late hour, I do not want to weary your Lordships with masses of statistics, but I want to get clearly across the gravamen of my argument.
In passing, I do not want to be a critic of the Milk Marketing Board, as such. It was established in the '30s under the late Dr. Addison, who was in the MacDonald Government, and it was later improved. I do not want to make a cheap Party political point, but, whatever our politics, we pay tribute on both sides of the House to the work of Tom Williams, the late Minister of Agriculture. Let me

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leave it at that, without trying to make capital out of it. I can also remember Smith, who was a Conservative Minister of Agriculture in the transitional period at the time of the war.
I am old enough to remember the farming disasters of the '20s and '30s and some of my family were farmers while others were miners. There is a wonderful old apocryphal crack in my family. I do not know whether my grandmother believed it, but my great-grandfather was the champion milker of Wales. The only trouble about him was that he was so enamoured of his milking prowess that every time he met a stranger he shook hands with one finger at a time. I am not sure about that, but it is a good story in the apocryphal history of the Davies family.
Today, we have invented a new system of society. I do not want your Lordships to come back at me politically, but all over the world technological society has invented the system of socialising the losses and privatising the profits. Even in the United States of America, the railways are subsidised. Subsidies are a common form of economics in the 20th century, and the old idea of pure, crystal-clear private enterprise, as such, is almost reduced to the level of a sweet shop or a little farmer with a small herd of cows, who has to work very hard and often gets less income than a bus driver.
Since small farming is business, we ought to be prepared, because of the great saving to our balance of payments, to plough a little more back into helping the small farmer. I do not like the expression "small farmer", because it sounds as if I am talking about English, Scottish or Welsh dwarfs, and I am not. I am talking about the farmer with a small acreage. I am not using the horrible word "hectares". I doubt whether 10 people out of 50 could say how many acres there are in a hectare.
A noble Lord: Tell us !
Lord DAVIES of LEEK: It is 2·47. Are your Lordships trying to catch me out? The Milk Marketing Board aims ultimately to complete the refrigeration of milk in vats on farms, and in the bulk milk scheme, by July 1979. Milk will
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then be collected only by road tanker which, in the end, means the demise of small-scale milk production, and the day of the hand-milked small herd will probably be finished for ever. I want to know what will happen to the 60-gallon farmer, who is considered small. Is he to be abandoned? Is not he, too, a small business? After all, I thought that the spirit today was to encourage small business.
This week I happened to pass through Stoneleigh and saw miles of farmers' cars —bless them!—going to the Royal Agricultural Show. I wish that they had had better weather. It is a magnificent show which does much for British agriculture, and more people than ever now come from all over the world to the Royal. Britain can be very proud of its productivity, but in farming, per head of capital, nobody can beat the farmer on a small acreage. He still has the productivity. The theme of the Royal Agricultural Show at Stoneleigh this year was the next 25 years in agriculture and its likely developments, and what British agriculture will be like in the year 2003. The emphasis was on technical innovation.
I want to enter a caveat here. Too much technology means an increase in the arithmetical chances of accidental breakdown and the wearying of the human spirit. Let me make a philosophical point, in passing. Freedom from all superstitions and freedom from certain kinds of labour—because we have invented electronic computerisation and technological processes—do not necessarily result in the production of an orderly society. Certainly, looking at the ugly discourtesy of the motorists on the modern roads of Europe, they do not add to the serenity of modern life. Probably the most discourteous animal on the roads of Britain today is the average driver, pushing along with that marvellous mass of human technology underneath him as he drives his car. I do not want to see British farming going all technological and going all for productivity, thus destroying the purpose of life.
Whatever we may think about agriculture, milk is still the major product and British consumers drink more milk than any other country, except in the Irish Republic. As the farming correspondent,

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Mr. Murray, pointed out in the Sunday Observer the other day, mainly because of the operation of the Milk Marketing Boards, their monopoly—it may be qualified, according to which Party gets into power—allows them to iron out the fluctuations of supply and demand across the country. They have been a boon to the farmer, big and small. That monthly milk cheque was the salvation of British agriculture. Surpluses of milk have gone to special areas and creameries.
I want to ask my noble friend, why cannot the small gallonage of the little man, with maybe less than 60 gallons, go in a churn to the creameries as happens in Ireland? Can we do something about that? And, for heaven's sake, do not let the Common Market destroy our doorstep delivery of milk. The milkman delivering the milk also helps the farmer with the small gallonage. What is more, the milkman is part of the social services. Many old gentlemen or old ladies have had their lives saved, because, in their loneliness, the milkman is more often a visitor.
In the constituency in the North-East of Staffordshire, which I had the honour to represent for over a quarter of a century, there were 3,000 farms, 1,400 of which were of 30 acres or less. How those people worked! I do not suppose that many of them voted for me; they were individualists. But they worked and they had a purpose and they were living and breathing the deep, free air. Their success lay in milk deliveries to schools and other places. I deprecate those mean local authorities who are now objecting to free milk for children aged 7 to 11. I do not want to name anybody, or their politics. The high mark of Britain's consumption is because we have about 45,000 roundsmen delivering milk in the early morning. We have to argue with the bureaucrats in Brussels to keep those milkmen. I hope to goodness that we keep them, because each day 15 million to 16 million homes in the United Kingdom receive their milk on the doorstep. It is a social service. It was the great Churchill who said that there is no finer investment that any community can make than to put milk into babies and the rest of us. I wish that some mean county councils would remember that saying when they are next
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due to debate the supply of milk to children between the ages of 7 and 11.
There are 3,000 of these huge bulk tankers which scour the countryside each day. The Milk Marketing Board provide an excellent system of bulk tanker collection. Let us be fair to them and ask: What is the advantage? The purest and best milk in the world is delivered to our homes by the Milk Marketing Board. Because we enjoy the advantage of bulk tanker collection, we are asked to abandon sales from milk churns. The Milk Marketing Board has rigid standards of cleanliness and hygiene, and ensures the composition and quality of this nation's milk, thus safeguarding the consumer and producing the best milk in Britain. But it had the best milk in Britain before the tankers. I know that the cleanliness of the milk churns was maintained and that farmers' wives and others maintained cleanliness in their small dairies. Our cleanliness is second to none in Europe and it is essential. All that we are doing is hindering the man with the 60 gallon milk production. In Scotland, 100 per cent. of the milk is already collected in bulk, while in England and Wales about 97 per cent. and in Northern Ireland about 80 per cent. is collected in bulk. In England and Wales, 86 per cent. of all milk producers are in the bulk collection scheme.
May I ask my noble friend who is to reply whether it is possible to evolve a formula like the green top system that we can extend to the small farmer? It is growing increasingly difficult to find dairies that will accept churn milk. Could not some scheme be evolved whereby they would be able to sell their milk to manufacturers for the purpose of making cream, cheese and butter? The problem with the tankers is that they come on to our country roads. These are the old B and C roads and they have to carry the weight of these tankers. This necessitates quite a large upkeep, which ultimately falls on the ratepayers and taxpayers.
We must remember that big things are not always the most efficient. If we study ontology or the history of the human race from primeval times, we have to ask ourselves why some of the mighty animals —some of which were 100 feet or more

1411
long, with huge limbs and thick hides—did not survive. The reason is that the information carried from their feet to their brains took so long to reach there! The bigger technological organisations become, the more we get mixed up. Because of computers, my bank statements today are the most difficult things to understand. In the old days, I knew whether the Minister of Agriculture had borrowed £10 from me, and I knew, by looking at my cheque book, whether he had paid me back. Today I just deal with numbers. Human beings are becoming numbers. We are losing the reality of living.
What current grants and subsidies can be used? I was unable to be here earlier this afternoon when the order relating to grants for the damage done by the great storms which occurred last winter was dealt with. However, could the hill livestock compensation scheme favour the smaller farms? It is those of about 7·41 acres which are eligible. Could calf subsidy schemes be used to encourage a new approach? Are we prepared to consider the lower level of farming where only a man and his wife are able to keep going? Best of all, could we not now take a new look at the capital grant scheme which came into operation in January 1974? The main items which were eligible for grant were farm buildings, silos, yards, waste disposal, milking equipment, bulk milk tanks, electricity and gas supplies, dairy and parlour buildings. I think that the very small gallonage man could get some help here.
We first introduced farm structure schemes in 1967. I do not want to detain the House for too long, but may we look at this year's annual review, since it shows the trend. On page 6 we see that the number of farms in the United Kingdom continued to decline. In 1977, the total number of holdings was 261,000, which was 3 per cent. lower than in 1975. Then the review goes on to say that the average size of farms is increasing. Full-time businesses averaged 113 hectares. There are 2·74 hectares to the acre. Including rough grazing, the total area in 1977 has to be compared with 111 hectares in 1975.
The trend to greater specialisation continues. Can we think of some kind of
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specialisation that the little man can take up with the encouragement of the advisory service of the Ministry of Agriculture, which has done excellent work? Three years ago, the average size of a herd was about 30 to 32 cows. Now the average size is 40 to 44 cows. In other words, the number of farms is growing less while the number of cows per farm is increasing. Once again we are worshipping at the shrine of bigness rather than keeping economic units at the optimum level.
A scheme for improving farm structures was introduced in 1967. Without reading out all of the grants available, because this information is available to the Minister, I believe that the standard grants are too small. According to the applicant's choice, he can obtain a lump sum of £1,000 for a farm of up to four hectares, which increases by £50 for each additional hectare of land, up to a maximum of £3,000 if he gets off his land. What is £3,000 today to a man who has lived all his life on the edge of the hills, on the side of a riparian meadow? To push a man of 55 or 60 out into the bleak world with £3,000 is almost suicidal. The annuity payable up to the age of 65 is at an annual rate of £250 for a farm of up to four hectares, increasing by £5 for each additional hectare of eligible land, up to a maximum of £450. In these days of inflation, these grants mean nothing.
If we are saying that little farms are to be moulded, rolled and cajoled by specious promises, that hedgerows should be destroyed and that we should make prairies out of farms that nature will ultimately destroy by blowing the earth away from them, or that we should go in for factory farming, what incentives will there be for our young who want to become farmers? There will be no small acreages for them to buy. There are many other grants available and, without boring the House—because I have taken the trouble to let the Minister know mostly what I am going to say and thus save the House a long speech—I express the hope that the Minister will spend some time studying this problem. Britain owes it to these food producers to work out a viable formula to keep the man with a small gallonage or a small acreage in existence. After all, he helped us to win the war with his food production.
8.1 p.m.
Earl FORTESCUE: My Lords, we are grateful to the noble Lord, Lord Davies of Leek, for raising this matter today. I cannot compete with the noble Lord's humour but I hope to compensate with a little brevity. Equally I am not sure how much I personally appreciated his point about the longevity of the larger animal and the length of time it takes messages to get from one's feet to one's head. However, the noble Lord's Question really asks whether all milk producers, however small, should be forced to store their milk in a refrigerated vat and allow it to be removed in tanker lorries arranged for by the Milk Marketing Board.
The situation described by the noble Lord affects the whole of England and Wales and results from a scheme announced by the Board in 1973 under which there would be a gradual changeover from the handling and transport of milk in churns to bulk collection and bulk handling. The changeover is due to be completed by the end of July next year. It is only right to point out that all areas will have changed over to bulk handling by the end of this month, except for Wales, the South-west and North-west of England, which have another year to prepare. The National Farmers' Union tells me that, so far, the transition has taken place smoothly in these other areas and that there have been few problems. However, the situation may be different in the West, with its higher proportion of small and remote farms. The main benefits of the changeover accrue to the Milk Marketing Board and the dairies in reduced handling costs and the improved keeping quality of the milk.
In general, we on this side of the House think that the scheme is both a good and fair one. Bulk handling makes the producer's life somewhat easier and there is a considerable financial incentive for him to change over to bulk. To put the matter in perspective, the small bulk milk vat with cooler can be bought for just over £1,000 and a 20 per cent. grant is available. Probably a better financial proposition is to rent a vat from the Board for about £27 a month for the first three years and thereafter at a nominal rent. To offset this expenditure the Board pays the producer a bulk premium of £11 per month plus just over 1p per
1414
gallon of milk produced during the month. As a result, and on balance, the producer with 15 to 20 cows breaks about even; the man with 10 cows may be £8 per month out of pocket and the man with five cows, £12 per month out of pocket. One should bear in mind that the monthly milk cheque from a five cow herd comes to some £200.
It is a sad thing that the family farm with a very small herd on a very small and often isolated farm is running a doubtfully viable unit in any event. But there are a number of worthwhile people who value their independence and are prepared to accept what many others would call a low standard of living. Other very small herds are owned by men who have jobs in industry and who milk their cows in their spare time. Some young men find that their only prospect of getting into farming at all is to start off on their own account by buying or renting a small farm and accepting a hard life until they have gained the experience and hopefully a little money to move on to a larger holding. These men and their families are valuable and should be encouraged. I should hate to see them forced to leave their farms. Equally I should hate to see their houses and their buildings lying derelict and their land revert to bog or heath, as the case may be. There is a good case for the amalgamation of a few small farms but again, to my mind, vast farming units do not benefit the countryside.
It seems that the very small farmer has a number of alternatives if he is not prepared to install his own small vat. He can still make his own arrangements with a local dairy which may be prepared to accept deliveries in churn by private arrangement. He can retail his own milk if he is suitably situated and inclined. He can turn over to calf rearing, with or without sheep, and obtain an EEC grant under their non-marketing scheme. This grant is worth more than £500 per cow if the farmer agrees not to supply milk for five years. A point I am not entirely clear on is whether two or three neighbours can share a bulk vat. If this was permissible—and at present I think it is not permissible—I feel that there would be little hardship to the small producer.
One final point which concerns me is the contract between the Milk Board and

1415
the producer. There is the situation where the milk producer has been forced to purchase a fixed bulk tank by the Milk Board and the understanding is that a tanker will arrive each day to collect the milk, measure the quantity and the milk will be paid for on a monthly basis. However this is not the case in practice. During the snowstorms late last winter the tanker lorries failed to get to some farms for up to five days. As a result, a lot of milk was tipped to waste and the loss fell upon the producer. This is surely wrong. I would urge the National Farmers' Union and the Board to renegotiate the contract and perhaps the Government could use a little persuasion here. It could be more important to producers in the West and in hilly districts than in some other parts of the country. In conclusion, I should like to reiterate my previous point that it would be a great loss to the country if more small farms and farmers are lost and to urge that all reasonable help should be given to these farmers to remain in business on their farms.
8.9 p.m.
Lord DE CLIFFORD: My Lords, I should like to join my noble friend in thanking the noble Lord, Lord Davies of Leek, for raising this matter. As your Lordships are probably aware, it is a subject which is very close to my heart. I have a great feeling for the small man employed in agriculture in this country. If we look back over history we shall find that he has been the basis of everything on which this country has grown up and become strong. He is virtually the small countryman, the foundation on which this country rests. It frightens me when year after year we find the enormous progress which is made by cold financial reason, without any thought being given to the person to whom it applies. I think this is very sad and very disastrous, because what it is doing is discouraging from continuing with it the very people who are providing the basis of our life.
This business of doing away with the collection of churns is one which has been brought to my attention in a number of ways, and in one of the ways which the noble Lord, Lord Davies of Leek, pointed out. We now have enormous tankers
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which go down very small roads. I must tell your Lordships that it was only yesterday morning when I was stopped three times on three different roads by the same tanker, and had to back, I suppose, in all, about 450 yards to enable this tanker to pass me. Not only did it stop me but I had a queue of cars backing behind me. It is very nice to have these large tankers going round, but they do tend in remote districts to disrupt the movement of people who live there. If my memory serves me correctly, when we reorganised the county councils they were given a certain length of time to put weight limits on their roads and to draw up a plan as to what weights these roads would carry. I have a feeling that, had they done this, we would not be having milk tankers down many of our roads now. They are definitely breaking roads up. When it comes to these remote areas, the money which is put into repair of them gets less and less.
The people who have to use them day in and day out all their lives are the people who are suffering, not only from the wear and tear but the damage to their vehicles in using the roads. We are getting the feeling out in these large rural areas that nobody really cares very much about what happens. We have the feeling that the noble Lords who now represent the Government, feeling that they will not win an Election there anyway, are not particularly interested, and my noble friends on the Front Bench, who know that they are going to win it, tend to be exactly the same. It is a feeling which is growing very considerably.
My Lords, I do not like seeing the small people vanish. I do not like seeing these farms getting larger and larger. The smallholder throughout this country is a man who has got to be considered. If we must have these collections, I hope the suggestion about having group chilled vats could be considered, because that would be a tremendous step to ensure that these people are able to continue in business. I should like to end by saying that I hope that, every time finance and big business consider what is to be done in the production of our material from agriculture, some thought will be given to the people who produce it, particularly the small people who have very little voice to raise to protect themselves.
8.14 p.m.
Baroness GAITSKELL: My Lords, I should like to add three or four sentences to this debate, if I may. I speak as a lapsed housewife. It seems to me that there is everything to be said for the arguments which have been put forward in favour of my noble friend's Question. I support my noble friend, as I say. The social consequences of this move, which seems to me an utterly ridiculous move, outweigh all the economic advantages that we might get from getting rid of the doorstep milk and getting rid of the churn. It seems to me that the present system helps working women, and there are going to be far more working women in the future than there are now; it helps the small businesses; it helps the schools. I am very pleased that my noble friend stressed the value of milk for the seven to 11 year olds in the schools, because milk is the cheapest and best food that children can have, and not only children but grown-ups too. I think that is all I have to say on this matter.
8.17 p.m.
Lord WALLACE of COSLANY: My Lords, I think this has been an extremely interesting and extremely useful debate, far more interesting than some of the debates we have had during this day, at least to me. I am also privileged in the fact that my noble friend Lord Davies of Leek very kindly gave me a volume of his speech notes. I would like to congratulate my noble friend because he is an artist of some distinction. Accompanying the speech notes was this lovely drawing of a small farmer, with the usual piece of corn sticking out of his mouth, leaning on a gate and saying this:
"Dear Lord Wallace of Coslany, what about my milk churns, me missus and me cows! Write an epitaph for the little farmer".
My Lords, I am not going to write an epitaph for the little farmer. In fact I would thank my noble friend Lord Davies for giving us this opportunity to discuss these arrangements for bulk collection. Before I come to reply to his points, I would like to congratulate the noble Earl, Lord Fortescue, on his debut, his maiden speech at the Dispatch Box. He, like me, is not exactly short, and those of us who are rather long in the leg would like an expanding Dispatch Box to reach a little
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higher than they actually do. However, we have to cope.
I think we all accept, as my noble friend has already said, that milk remains the central agricultural commodity. Each day in the United Kingdom some 37 million litres of milk are collected from the farms of about 70,000 producers. Of this, the Milk Marketing Board of England and Wales, whose plans are referred to specifically in my noble friend's Question, accounts for over 31 million litres, involving about 55,000 producers. Much of what is covered by this Question relates to the Board's day-to-day operations, and it is, therefore—we must admit this—something where the Government do not have a direct locus. We are in fact discussing the Milk Marketing Board but noble Lords have given their views on the Milk Marketing Board's proposals. I think it is, however, a legitimate area for us to reflect on what has been done and what is being done.
The Milk Marketing Board in England and Wales first introduced bulk collection in 1955, as an alternative to the use of churns, on a trial basis in Berkshire, but it was not until the early 1960s that development really got under way. The benefits of bulk collection over churn consignment both to the consumer and to all sectors of the dairy industry quickly became apparent. There are considerable labour savings on the farm through the elimination of churn handling; milk transport costs are reduced through the use of refrigerated bulk tankers which are more efficient than churn collection lorries; there is a reduction in distribution costs since milk handled in bulk can be brought direct from farm to dairy thus reducing the need for double handling at country depots; and there are savings in labour and other costs at the dairies through elimination of the need to receive, handle and clean churns—not to mention the elimination of noise. Finally, as bulk milk is cooled on the farm, it arrives at the dairy in a better hygienic condition than milk in churns. This also benefits the producer, of course, by reducing the risk of his milk being rejected by the receiving dairy, a point, which, if I remember correctly, was mentioned by the noble Earl, Lord Fortescue.
By 1973 about 68 per cent. of all milk was being collected in bulk, but this

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represented only about 38 per cent. of the total number of farms in England and Wales. The Board had however already recognised the need to make bulk collection attractive to the smaller producers and were able to announce that the manufacturers of bulk milk vats had been encouraged to produce small refrigerated vats of 60 to 90 gallons capacity specifically for the benefit of farmers with small herds. A special fixed rate premium was made available to producers installing small vats as well as loan arrangements under which the Board were prepared to lend up to 100 per cent. of the total cost of the vat, the loan being repayable, with interest, by deductions from the producer's monthly milk cheque.
At the same time, the Board introduced a specially trained team of bulk milk development advisers whose specific task it was to visit each remaining churn producer in each of the 11 Regions of the Board in turn—starting with the Eastern, Southern and South-Eastern and East Midlands regions where bulk collection was already most highly developed and completing their task by the end of 1977 with visits to the least developed areas (the North-West, Wales and the South-West of England)—with the overall objective of achieving 100 per cent. conversion from churn to hulk collection in 1978. In all, over 20,000 of these visits were made.
Since October 1974, producers converting to bulk have also had the opportunity to rent their vats from the Board under a scheme providing for a monthly rental for the first three years (calculated to repay the cost of the vat to the Board) and thereafter a nominal rental of £1 per month. In turn the rental scheme has enabled the Board to obtain the benefit of a grant from the EEC Agricultural Fund and this, linked with the fact that the Board are able to negotiate discounts from vat manufacturers, has meant that producers are able to rent vats from the Board at prices up to 30 per cent. less than those for outright purchases. This scheme has proved immensely popular with producers; by way of illustration, over 70 per cent. of 17,500 producers converting to bulk since 1974 have chosen the rental scheme.
By May 1975, 83 per cent. of all milk in England and Wales was being collected in
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bulk; and the Board established that by March 1976 all but 2 per cent. of the milk produced in the four regions where bulk collection was most advanced would consist of churn supplies. In these cirstances, it was becoming increasingly difficult for the Board to find dairies willing or able to handle the residue of churns. The Board therefore announced that a churn collection charge would be introduced in the four regions on 1st August 1976 and that it would not be possible to collect churns at all in those regions after 31st July 1977—although in practice the Board decided to extend this deadline by three months to 31st October 1977 to coincide with the introduction of the EEC's Milk Non-Marketing and Conversion Premium Scheme. Churn collection charges were extended to the Board's Northern and West Midlands Regions from 1st August 1977 and will be extended to cover the rest of England and Wales from 1st August 1978. In accordance with the Board's policy to phase out churn collection completely 12 months after the introduction of the churn collection charge, churn collection will cease in the Northern and West Midlands Regions by 31st July 1978 and in the remaining regions by 31st July 1979. Currently it is estimated that about 97 per cent. of all milk produced in England and Wales involving 86 per cent. of all milk producers is collected by bulk tanker.
Noble Lords will, of course, be able to form their own judgment, but I think the Board themselves would say that they have taken considerable care in promoting bulk collection to consider the needs and problems of all milk producers particularly those with small herds, and that, over the many years that the scheme has been developing, they have been at pains to make bulk collection available to the producer on the best possible terms and to give him as much notice as possible of any developments likely to affect him. Nevertheless, I am sure they will be responsive to the points which have been raised in this excellent debate tonight, and that they will take a sympathetic view of any individual problems that may arise and do all they can to help. May I say that if any noble Lords have any individual points that they would like to make I should be grateful if they would either pass

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them forward through the usual channels or straight to the Milk Marketing Board.
As I have indicated, the arrangements for the collection of milk from farms are essentially a matter for the Board and the Government's role in this, both from a general point of view and in relation to the situation facing individual producers, is a very limited one. Nevertheless, from 1965 up to 31st December 1977 when the guaranteed price system came to an end, successive Governments felt justified in making financial assistance available to the Board for the bulk milk programme on the grounds of the benefits resulting from economies in milk handling and improved hygiene. Currently, grant aid is available under the Ministry of Agriculture's Farm Capital Grant Scheme at the rate of 20 per cent. to producers who install their own bulk milk vats. Thus incentives have been—and are being—offered to all producers to change over from churn to bulk milk collection, and there is no evidence to suggest that further measures are needed to help small producers.
Of course, there will be inevitable cases of special difficulty—especially the small farm with difficult access—but the Board have sought to meet this particular problem by the introduction in recent years of mobile vats which enable farmers with access problems to move their milk in bulk to a suitable roadside pick-up point. It is also fair to say that, whilst we have today dwelt on the position in England and Wales, the three milk marketing boards' areas in Scotland attained 100 per cent. bulk collection some two years ago in a way which suggests that any remaining difficulties South of the Border can be effectively dealt with.
A number of noble Lords have touched on various issues and I do not apologise for taking time to give, so far as I reasonably can, some detailed replies to their questions. The noble Lord, Lord de Clifford, made a point about large tankers and small roads. Other noble Lords made a similar point and I shall deal with the matter in a moment. I rather regret the noble Lord making a political point which rather tended to make the milk debate sour, but perhaps the advent of a certain election may have prompted him to be a little careless in his approach.
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I should like to say to my noble friend, Lady Gaitskell, that I cannot reply strongly enough that there is no question of stopping doorstep delivery of milk—no question whatever. No British housewife or British husband supporting his British housewife—as indeed he is almost bound to do—will allow a thing like that to come about. We can at least wave the Union Jack vigorously on that issue.
My noble friend Lord Davies of Leek certainly plied a large number of questions. He referred to grants for small farmers. I do not intend to take up the time of the House by going into a great deal of detail, but I should like to say something about the options that are open to them. It is not anticipated that the introduction of bulk milk collections will result in any farmer having to give up milk production. Small producers have, of course, been able to benefit from financial incentives, to which I have already referred, in just the same way as their colleagues with a larger scale of operation. As I have already said, it is unlikely that any farmer will be forced out of milk production by the Marketing Board's bulk conversion arrangments.
However, I should remind noble Lords that should a farmer decide that he no longer wishes to continue in milk production, certain grants are available to assist him to convert. I am speaking, of course, of the EEC's Milk Non-Marketing and Conversion Premium Scheme. This scheme—which, noble Lords may recall, was recently revised and extended by the Council of Agricultural Ministers—introduces grants, known as "non-marketing premia", to those farmers who decide to cease production of milk or milk products for marketing purposes. In addition, a higher rate of grant, known as a "conversion premium" is available to those farmers who are willing to convert from milk production to keeping beef animals or sheep. Any producer who is contemplating taking advantage of these arrangements would be well-advised to consult with local Agricultural Advisory Service, which will be pleased to assist him.
I would reiterate, as the noble Earl, Lord Fortescue, did, that a farmer with a small herd is not obliged by the Board to change to bulk collection if there is a

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dairy willing and able to receive his churn supply. A number of such cases exist in those regions where churn collection has already been phased out by the Board, the terms on which the churn supply is handled being a matter for agreement between the producer and the dairy.
My noble friend Lord Davies of Leek and other noble Lords have greatly stressed the question of tanker traffic. The noble Lord, Lord de Clifford, spoke about large tankers obstructing his progress. I hope that they were milk tankers; if not, they might be petrol or other tankers. However, I think that we have to consider the position as it actually is. The effects of tanker traffic on rural roads and the environment generally are expected to be small in relation to the present situation. The Board's larger tankers are used only for deliveries between dairies and for the transport of milk from smaller tankers. These latter vehicles, which are used on smaller country roads, are no bigger in overall size than the standard lorry used for churn collection. The extra carrying capacity of the tanker reduces the number of vehicles on the road at any given time and also increases the work-load in a day. Moreover, tankers usually travel right up to the farm building and, therefore, do not need to wait in the road for loading, as churn lorries do.
Another important point is that where farms have poor access facilities mobile mini-vats can be used. These can be pulled by tractor or manhandled to a convenient pick-up point where the milk can be transferred to a tanker, so obviating the need for tankers to use very small country lanes. Although it is nothing to do with this actual debate, country roads come into the picture. Local authorities may obtain assistance from the European Regional Development Fund. The trouble is that some local authorities are very slow to move, but that is not the fault of the Milk Marketing Board; it is the fault of the members of the local authority. I have already mentioned doorstep milk; doorstep deliveries will continue.
My noble friend Lord Davies of Leek also asked: Is it possible to extend the green top—that is, the untreated milk scheme—to the small farmer? Farmers
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who sell green top milk are those who do not heat-treat or pasteurise their milk. Many of these farmers have bulk milk storage facilities. I turn to a point on which I have very strong views indeed. I am the father of two bonny children—they are getting a bit elderly now—who were reared on milk. My noble friend referred to the value of drinking milk, particularly to young children. I should like to emphasise this. It is to be hoped that all those local authorities which have not yet made up their minds will take full account of the recent advertisement by the National Dairy Council, which set out a compelling case in favour of the new discretionary milk scheme. It is important that our children should get their full share of a very important element in their diet, apart from the desirability of this country as a whole deriving maximum benefit from the EEC subsidy.
The noble Earl, Lord Fortescue, and, I think, the noble Lord, Lord de Clifford, and others made a suggestion about producers sharing bulk vat facilities. That suggestion has certain possibilities; it is a good suggestion. There are problems in recording the quality and quantity of the milk collected and there might also be problems in monitoring supplies after they had been collected. However, we shall certainly look into the feasibility of the suggestion, which has practical possibilities; I think that there is a possibility that something could be done. That point will certainly be followed up.
I could go on and on about this very interesting subject, but I see that I have already taken 19 minutes. Perhaps I could sum up what has been said in the main issue before us tonight. I think that there is general agreement that real benefits in terms of economies in handling and improved hygiene have already accrued both to the consumer and to all sectors of the dairy industry through the conversion to bulk collection of our daily milk supplies. Most of the country is now enjoying these benefits and in England and Wales where, as I have said, 97 per cent. of all milk is now collected in bulk, the Milk Marketing Board's announcement that churn collection will cease on 31st July 1979 marks the end of a very long and painstaking exercise which has had the support of successive Governments. Throughout this exercise the Board has

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endeavoured to give special consideration to the position of farmers with small herds, and I am sure that this will remain uppermost in its mind as the bulk conversion programme moves to its conclusion.
May I conclude on this point. Stress has been put on the value of the small farmer and I should like to emphasise my personal support of the recognition of the small farmers for the work that they have put in. The small farmer is probably the hardest-worked member of the community in running his small farm. He not only has the problems of trying to make a living out of it, but he has the physical problems of coping with the tremendous demands. In this connection, do not let us overlook the value of the farmers' wives, many of whom are doing as hard a day's work as their husbands. I thank my noble friend for raising this Question tonight. I think that the House as a whole has given it a very reasonable and welcome discussion.

LONDON TRANSPORT BILL
Reported with Amendments.